Professor Cheung criticized macroeconomics heavily. One example is the failure to identify the relationship between deflation and economic downturn (including the rise of unemployment). According to Cheung, China showed that a country free of labor restrictions can survive deflation without losing jobs.
A recent article written by David Beckworth offered another explanation. To him, aggregate supply-driven deflation (i.e. price level is driven down out of increase of productivity) should not be taken as the same as the one driven by declining aggregate demand. The former one, which I assumed as the one China experienced back in the late 90s, is a ‘healthy’ one.
Both explanations may be true. I would add one more point: Chinese consumption model was less dependent on credit, thus allowed them to ‘immune’ to increasing debt burden. Related to this perspective, Fisher’s ‘The Debt-Deflation Theory of Great Depression’ is a insightful one to read.