China’s Potential Deflation Threatens to Overthrow Global Monetary Order People’s Bank of China (PBOC) governor Zhou Xiaochuan, speaking at a forum of the nation’s high-ranking officials and top businesspersons on the Chinese island of Hainan in Sunday, admitted the Communist nation is falling into the mire of deflation at a faster pace than might be expected. Coupled with the dramatic slowdown in the nation’s real economy, the threat of deflation might prompt the Chinese central bank to implement a full-scale stimulus, also known as ‘quantitative easing’ or QE, in the nearest future. Despite the fact that stock markets would eagerly welcome such a scenario, the Chinese QE, coming against the background of similar policies in Europe and Japan, might have dire effects on the global economic outlook, significantly impairing living standards all across the globe. Despite this, Beijing has undertaken several limited-effect policies of monetary easing, such as allowing more renminbi-denominated liquidity in the economy by lowering the reserve ratio requirements (RRRs) for certain banks, the deflatory pressure has eased only somewhat with prices at the factory gate still declining and the overall economy slowing far below the demographically-dictated minimum growth threshold of 8%. The PBOC even cut its base interest rate twice since November, but, as the economy weakens further, full-scale QE is looming as the only solution. FULL REPORT