The global economy must think – and act – as one, if it is to avert looming disaster
Andrew Sheng says to how best to deal with debt deflation is the elephant in the room, and the world needs – but is unlikely to agree on – a set of international monetary rules that allows it to take action for the collective good

Para Limes is an institute dedicated to complexity studies – the idea that we cannot see the world from partial analysis, but must take into consideration the interconnected whole. Professor Geoffrey West, former president of the Sante Fe Institute (the first of the complexity institutes founded by the scientists who participated in the Los Alamos nuclear programme) and a leading thinker on growth, innovation and urban life, delivered a brilliant view on the sustainability of present growth models.
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Modern life and culture is increasingly urban, because the larger the city, the more efficient the usage of energy and resources, but there are costs in terms of pollution, crowding and spillovers. In other words, growth accelerates exponentially until the economy reaches maturity and slows down, and if there is no longer innovation and change, growth can even become negative. Life follows an S-curve and therefore growth can only be sustained with continued innovation and reform – exactly what the Chinese are attempting.
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In contrast, the Chinese economy, currently the world’s No 2, is slowing and also ageing. In Beijing, the world sighed with relief as Premier Li Keqiang (李克強) pledged to uphold steady growth, renminbi stability and continuous reform. As oil prices seemed to stabilise at around US$40 per barrel and the US Federal Reserve committed to slower interest rate adjustments, financial markets actually turned back upwards.
