US money printing to fund deficit poses major risk for 2021, says ex-China central bank official
- Zhou Xiaochuan, who led the People’s Bank of China between 2002-18, says modern monetary theory will have ‘side effects’
- Global inflation, asset bubbles and the consequences of quantitative easing will be major issues next year, the economist says
A former Chinese central bank governor has warned there will be no free lunch following unprecedented money printing by the United States and blind faith in modern monetary theory, warning of potential side effects and labelling them as one of six major issues facing China and the world next year.
The comments by Zhou Xiaochuan, who led the People’s Bank of China (PBOC) between 2002-18, come as Beijing puts up higher barriers to protect the world’s No 2 economy from damaging capital flows and market turbulence, while at the same time stressing the importance of multilateralism.
Zhou called on the central government to uphold global cooperation, especially ahead of the Group of 20 (G20) summit in Rome next month, saying conflict in trade, finance and technology will hurt the interests of all nations.
China doubled down on its commitment to multilateralism when it announced on Thursday it had formally applied to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), a trade pact abandoned four years ago by the US.
