Honestly the fundamental flaw is that the central bank only has one tool. It can add money to the economy but only on the supply side. In theory this is enough because companies don't exist in isolation, to operate they must always employ workers. The problem with this theory is that those workers don't have to be domestic workers. If you lend me USD to build an LCD factory I 100% won't build the factory in Wisconsin or anywhere in the US.
There are two options: Just wait (for decades) until salaries in China have caught up to western levels. Introduce an artificial stimulus for domestic work.
That artificial stimulus is not the responsibility of the central bank. The rest of the government has to do this.
There are two options: Just wait (for decades) until salaries in China have caught up to western levels. Introduce an artificial stimulus for domestic work.
That artificial stimulus is not the responsibility of the central bank. The rest of the government has to do this.