How to save China’s economy

EARLIER THIS year a Chinese publisher released a translation of “In Defence of Public Debt”, a book by Barry Eichengreen of the University of California, Berkeley, and several others. Reaching deep into history, the book seeks to restore balance to the debate on government borrowing by emphasising its neglected benefits. Mr Eichengreen argues that indebted countries can get into trouble when they turn to fiscal restraint too soon, neglect growth or succumb to deflation, which only makes debt harder to service. The arrival of the translated edition was timely. Many economists believe the Chinese government’s fiscal caution this year has contributed to disappointing growth and the danger of falling prices.