China forum | Stephen S. Roach

China and US should properly handle excesses in asset and credit markets, and avoid dangerous distortions of economy

It was never going to be easy, but central banks in the world's two largest economies - the United States and China - finally appear to be embarking on a path to policy normalization. Addicted to an open-ended strain of uber-monetary accommodation that was established in the depths of the global financial crisis of 2008-09, financial markets are now gasping for breath. Ironically, because the traction of unconventional policies has always been limited, the fallout on real economies is likely to be muted.