Latest News:  
Beijing   Cloudy/Sunny    27 / 17 ℃  City Forecast

English>>China Business

New dose of US easing may slow China's recovery

By Wang Yanlin   (Shanghai Daily)

09:47, September 15, 2012

The third dose of "quantitative easing" in the United States, or QE3, may slow the process of China's economic recovery in the near term by denting exports and accelerating inflation, analysts said.

But the impact will be smaller than the previous two easing moves and a prosperous US market may eventually be helpful to China in the long run, they said.

Sun Lijian, an economics professor at Fudan University, said the launch of QE3 will weaken the US dollar and increase the costs for Chinese exporters who settle deals with the greenback. Also, the move may stoke commodity prices on the global market, which will spread inflationary pressure into China.

"Although this round of easing in the United States is not as aggressive as before, it still creates a lot of uncertainties and makes it more complicated for China to stimulate its economy," Sun said.

Yesterday, the central parity rate of the Chinese currency strengthened to 6.3317 against the US dollar, the highest since August 24.

The US Federal Reserve announced on Thursday the third round of quantitative easing, in which America's central bank will expand its holdings of long-term securities with monthly purchases of US$40 billion mortgage debt. It will announce a new target at the end of every month until the jobs outlook improves "substantially," as long as inflation stays in check. The Fed promised to keep short-term interest rates low until mid-2015.

The predecessors of QE3 have been criticized widely for fanning inflation around the world. The effect is the same as printing money in vast quantities.

The new round of easing is much milder, said Steven Green, an economist at Standard Chartered.

The QE1 and QE2 have worked to accelerate the yuan's appreciation, bolster prices in China, divert more speculative funds into the country and complicate China's monetary policy decisions, according to economists.

"The similar impact may be seen this time and may push China to launch more easing policies of its own," said Li Maoyu, an analyst at Changjiang Securities Co. "But it is really a dilemma for Chinese policy-makers as the inflation in the country looks like it's picking up earlier than expected."

China's Consumer Price Index, the main gauge of inflation, grew 2 percent in August, up from 1.8 percent a month earlier.

But Qu Hongbin, chief economist for China at HSBC, said the benefits of the QE3 for China may outweigh potential damage.

"The QE3 is likely to reduce the unemployment in the United States and stabilize its economy," the economist said. "A prosperous market in the world's largest economy will eventually help others, especially export-reliant countries like China."

>

News we recommend:
Banks need to transform to boost margins Consumer finance set to boom in China Ailing steel industry cheered by construction projects
Chinese firms ramp up presence in Thailand Chinese go online to buy latest iPhone Chinese winemakers demand anti-dumping
Energy conservation: A new investment opportunity  Summer Davos cultural dinner party held in Tianjin Steel producers face bleak months ahead

Email|Print|Comments(Editor:燕勐、梁军)

Leave your comment0 comments

  1. Name

  

Selections for you


  1. Female sailors of "Jinggangshan" warship

  2. View the world: Every day is unusual (9/12)

  3. Huawei & ZTE deny facilitating espionage on US secrets

  4. Top 10 attractions in Shaanxi, China

  5. Netizens joke about the 4-Inch iPhone

  6. Solar system images taken by detector

Most Popular

Opinions

  1. Commentary: All that nonsense about outsourcing
  2. Editorial: Staying the growth course
  3. "Purchase" of Diaoyu Islands could cost Japan
  4. Japan violates common ground for bilateral ties
  5. Islands 'purchase will hurt economic ties'
  6. Libya fiasco shows sad reality of US policy
  7. Editorial: Davos seeks recovery path

What's happening in China

19 workers in Wuhan killed after elevator plunges 100m

  1. Lobby wants tobacco out of quake relief
  2. Milk scandal culprits rehired
  3. Court takes 7 years off captain's jail term
  4. Websites, microblogs closed for fraud, blackmail
  5. Prestigious Tibetan monastery receives facelift

China Features

  1. China mulls tourism law to eradicate loopholes
  2. Entering ancient town of Taierzhuang on canal
  3. Family tree culture in China faces crisis
  4. North Korea's Kim, wife inspect Exercise Center
  5. A glimpse of Berlin Air Show

PD Online Data

  1. Ministry of Water Resources
  2. Ministry of Railways
  3. People's Bank of China
  4. Ministry of Health
  5. Ministry of Culture