Stuck in Deflation

Barron's: China’s Lopsided Economic Recovery Continues. Expect Widening Global Trade Gaps.

That wasn’t an accident, but a necessary consequence of China’s political and economic model, which systematically transfers spending power from the vast majority of the Chinese people to Communist Party elites and politically connected businesses. Thus, despite the apparent commitment of top Chinese officials to rebalance the economy, their unwillingness to alter the fundamental characteristics of that model has prevented meaningful changes to the composition of economic activity.

I have been keeping tabs on the Chinese economy, but not posting much about it because it's the same cycle. Economy slows, pump up real estate and commodity production, boost trade surplus, capital controls. Repeat after it results in a new downturn, global commodities crash and new multi-year high for USDCNY. I see no evidence that the global economy is escaping from this trap. The only shift is a possible monetary debasement via fiscal stimulus, led by a policy shift in the USA, but the markets have put the cart before the horse.