China should sacrifice the yuan to avoid falling into a vicious cycle of debt and deflation, economist says

• China's economy risks falling into a vicious cycle of debt and deflation, said economist Shang-Jin Wei.
• To avoid that, the central bank could launch an aggressive bond-buying campaign, he wrote in Project Syndicate.
• While that could also weaken the value of the yuan, "it is a price worth paying," Wei added.

China's economy risks falling into a vicious cycle of debt and deflation, but avoiding that trap may require letting the yuan lose value, said economist Shang-Jin Wei.