OXFORD, England -- There has been much discussion recently about whether China is heading for a soft landing or hard landing. My first reaction to such discussions is always to ask landing from what? In this case the answer is relatively easy, the Asian financial crisis of 1997, from which China allegedly escaped because of its brave decision not to devalue the yuan.
In fact it did not escape the crisis. The government just forced the adjustment costs onto those sectors that lost competitiveness from the overvalued currency, such as marginal cotton and tobacco growers and shipbuilders and miners.
But let that be. The overall impact of the failure to adjust the economy immediately to the crisis has involved a heavy price for the economy. China is in the middle of a hard landing, but in Humpty Dumpty language ("When I use a word," said Humpty Dumpty, "it means just what I want to mean, nothing more.") everything is fine according to the government.