Chinese economists debate potential for domestic stagflation, with most dismissing the risk
- Ren Zeping, chief economist at the Evergrande Group, says stagflation is coming, but others such as Yu Yongding are dismissing such concerns for now
- Stagflation occurs when the inflation rate is high, the economic growth rate slows, and unemployment remains elevated
A worrisome prediction by a renowned Chinese economist has sparked heated debate among experts in his field.
“Stagflation is coming,” Ren Zeping, chief economist at the Evergrande Group, warned earlier this month. He had earlier cautioned that China was at risk of “light stagflation” as a result of escalations in trade tensions with the United States since late 2018.
But not everyone is in agreement. Some economists argue that stagflation is indeed looming, while others are dismissing the suggestion out of hand, saying the odds of it occurring in China this year are very low.
Stagflation is a situation in which low economic growth and high inflation occur at the same time, potentially leading to higher unemployment and lower wage growth.
Other indicators have suggested that the economy’s recovery slowed in recent months.