How to Reduce Chinese Overcapacity
We cannot change the past, but we can apply its lessons to achieve a better future. In China’s case, this means implementing a more expansionary fiscal and monetary policy in order to help reduce overcapacity at the macroeconomic level while creating more space for eliminating overcapacity at the sectoral level.
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BEIJING – In recent months, Chinese overcapacity has been a major topic of discussion – and a source of controversy – among economists and policymakers around the world. While these concerns are not entirely off base, they are excessive and resolvable.