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Economic-policy inertia spells trouble

Overview

The 2008 annual session of the National People’s Congress has provided a revealing public test of the government’s willingness and ability to rise to the challenges presented by accelerating inflation and the related domestic liquidity bubble. That test was failed.

The economic policy picture that emerged was one of inertia and confusion. Concerns over financial stability are still outweighed by fears that growth might be damaged. That fear buttresses resistance to a sharp RMB...

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