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Chinese President Xi Jinping on Monday called on the world’s major economies to stimulate growth by coordinating policies as the world continues to emerge from the turmoil caused by the coronavirus pandemic.
He warned against the impact of raising interest rates too quickly, saying such measures could threaten global financial stability.
“If major economies hit the brakes or turn around on monetary policy, there will be serious negative spillover effects,” Xi said. “They will pose challenges to the global economy and financial stability, and developing countries will bear the brunt.”
Many global policymakers are grappling with rising inflationary pressures and beginning to end pandemic-era stimulus.
But as the economy slows, China, the only major economy to grow in 2020, has taken a different tack and grappled with the challenge of maintaining momentum, while sticking to its zero Covid-19 strategy, a strict lockdown of areas to prevent outbreaks policy. Cut off the country from most of the world.
People’s Bank of China has Been loosening the wallet to keep things running smoothly.
Beijing’s latest measures come as the country reported an 8.1% growth in its economy in 2021.While the figure exceeded the government’s own target, growth slowed to half that rate The final quarter of the year is expected to be tougher due to the Covid-19 pandemic and a deepening housing crisis.
Chinese government economists have been warning of the spillover effects of the Fed raising interest rates.
“Historically, the Fed’s rate hikes have repeatedly triggered financial and economic crises in other countries,” Zhu told the paper, adding that the imbalance could lead to foreign capital fleeing China.
Zhu also called attention to the dollar-denominated bond market for Chinese companies, which he noted was rapidly expanding. Many companies in China’s troubled real estate sector hold dollar-denominated bonds; if they become more expensive to repay, that could cause more trouble.
Meanwhile, the International Monetary Fund warned that a sudden tightening of monetary policy in the United States or Europe could lead to economic turmoil in developing economies.
U.S. views on growth and inflation shift as prices rise, IMF writes at the fastest pace in nearly four years.
At the same time, the economic recovery in emerging countries has not been as strong, adding that these places are facing “significant increases in public debt”.
“Fed responds with faster rate hikes [to inflation] That could roil financial markets and tighten global financial conditions, the IMF said, warning of slowing U.S. demand and trade and its impact on developing economies that rely on exports to U.S. consumers.
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Sources 2/ https://www.cnn.com/2022/01/18/economy/china-xi-davos-warning-interest-rate-intl-hnk/index.html The mention sources can contact us to remove/changing this article |
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