The Global Economy’s Chinese Headwinds
FEB 12, 2015
BEIJING – Last year, the global economy was supposed to start returning to normal. Interest rates would begin rising in the United States and the United Kingdom; quantitative easing would deliver increased inflation in Japan; and restored confidence in banks would enable a credit-led recovery in the eurozone. Twelve months later, normality seems as distant as ever – and economic headwinds from China are a major cause.
But counting on this investment may be excessively optimistic. Though China will indeed need more investment, its capital-allocation mechanism has produced enormous waste.