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A view of the skyline and buildings at Shinjuku district during sunset in Tokyo, Japan June 20, 2021.

REUTERS/Pawel Kopczynski

Will Japan raise interest rates … to zero?

Japan’s central bank will debate a landmark interest rate rise next week that could bring interest rates to a staggering 0% after nearly a decade of negative rates.

As the saying goes, there are four types of economies: developed, underdeveloped, Argentina, and Japan. While most countries have been working hard to cool inflation, Japan has struggled with the opposite problem, deflation, since the 1990s. Lower prices at the grocery store are nice, but consumers pay for it on the other end: Businesses see revenues fall, struggle to pay their debts, and lower wages or downsize to break even (mostly the former in Japan). The economy stagnates and ordinary families suffer.

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The headquarters of the People's Bank of China is pictured behind an iron chain in Beijing.

REUTERS/Jason Lee

Will China’s property woes get political?

As China’s financial troubles mount, analysts forecast stormy skies for its economy — and potentially, its politics.

Much of the turmoil centers on the country’s real estate sector, which has traditionally driven up to 25% of its economic growth. Last Friday, property development giant China Evergrande Group filed for bankruptcy in the US after two years of restructuring. The same day, Hong Kong’s Hang Seng Index announced that it would be dropping Country Garden Holdings, the country’s largest property developer, from its listing as of Sept. 4. Earlier this month, Country Garden missed a deadline to pay $22.5 million in loan interest and is described as “teetering on the edge of default.”

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A worker works at a workshop of a textile company in Binzhou city, East China's Shandong province.

Reuters

China flirts with deflation. Why is that a bad thing?

Times are tough in the world’s second largest economy. After several years of on-and-off-again pandemic lockdowns, China’s economic rebound remains limp. Even the notoriously tight-lipped politburo of the Chinese Communist Party recently nodded to the economy’s “tortuous progress.”

While much of the rest of the world contends with inflationary pressures, many economists say China is tussling with the inverse phenomenon: deflation.

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