| Stanford economist Ronald McKinnon argues that China is caught in a currency trap because of its own savings surplus, the U.S. fiscal deficit and near-zero interest rates on dollar assets. As a result, China cannot at this time move toward a more market-driven economy with liberalized interest rates and private banking.
Until the global economy improves dramatically, China's policymakers will have no easy way out of their currency trap, argues a Stanford economist. In a new research paper, Ronald McKinnon, professor emeritus of economics, concludes that China is hostage to its own savings surplus – and the United States' lack of savings – and almost-zero interest rates on dollar assets...............................................Full Article: Source
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