China Seems To Be Entering Zugzwang: Barclays

Thanks to accelerating capital outflows, China’s policy makers are confronting choices that resemble the concept of zugzwang, in which any change in the status quo would weaken a player’s position. Ajay Rajadhyaksha and Jian Chang of Barclays point out in their Feb. 22 report titled “Cross Currency Research” that the concept of zugzwang as used in chess effectively highlights Chinese policy makers’ choices as they have to make a decision about the country’s currency and monetary policy in the next few quarters. China experienced massive over-investment cycle Rajadhyaksha and Chang note that when the Chinese economy slowed down sharply last summer, the…