A deflationary shock for the global economy

“China’s had one of the biggest credit booms in modern history. Historically, credit booms of that size, which happen that quickly, they all result in financial crises,” says Harry Colvin, Senior Market Strategist at Longview Economics. So can China’s economy finally fulfil the age-old mantra of ‘this time is different’? He doesn’t think so. So after so much speculation, why now? “The Fed have been tightening up Dollar liquidity and ultimately, China’s financial system is dollarised. If you tighten up Dollar liquidity, you tighten up China’s financial system.” In his view, the Chinese government has not provided sufficient stimulus to offset this tightening, so “the next leg is down.” Watch the full video below to find out how this will affect Australia and the rest of the world.