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With China’s economic slowdown more apparent than ever, its prospects of avoiding a hard landing are weakening. Whether policymakers succeed will depend on whether they can navigate the challenges stemming from an increasingly divided dual-track economy.

The latest year-on-year data, from January, highlight the danger. The consumer price index dropped to 0.8 percent; the producer price index fell by 4.3 percent; exports contracted by 3.3 percent; imports were down by 19.9 percent; and growth of broad money (M2) slowed by 1.4 percent.

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