Latest News:  
Beijing   Overcast/Moderate rain    9 / 12 ℃  City Forecast

English>>China Business

People’s Daily: Reducing systemic risks facing world economy

By Zhong Sheng (People's Daily Online)

16:47, October 26, 2012

The “unilateral action” in U.S. economic policy and its negative spillover effects present a serious challenge to the reform of the global financial system.

From November 2008 to September 2012, the U.S. Federal Reserve injected a large amount of capital into financial markets, and launched three rounds of quantitative easing (QE).

The Fed has also vowed to keep its target federal funds rate in an ultra-low range of zero to 0.25 percent at least through 2015. All these measures taken by the Fed are aimed at alleviating the credit crunch, stimulating domestic economic growth, and reducing domestic unemployment.

QE has stimulated the U.S. economy to a certain extent, but also produced marked negative effects. The United States has introduced a series of conventional and unconventional ultra-loose monetary policies in the past few years, leading to global excess dollar liquidity.

As trading of international bulk commodities is mostly settled in the U.S. dollar, excess dollar liquidity has inevitably driven up the prices of international bulk commodities, causing inflation on a global scale.

There are two main reasons for the great impact of U.S. domestic economic policy on the world economy.

First, the United States is the world’s largest and most open economy.

Second, it is the issuer of a global reserve currency. The U.S. dollar is the world’s primary reserve and settlement currency, and the U.S. Federal Reserve is the world’s only creator and supplier of dollar liquidity.

This gives the United States a dual identity in the global capital mobility cycle – being both a crisis-maker and a rescuer.

The United States has long relied on the dollar hegemony to support its high consumption, high trade deficit, and high debt by over-issuing the dollar, which has produced serious adverse effects on both the U.S. and world economies.

【1】 【2】

News we recommend:
"Made in China":Charming the World "Made in China":A Boon for the Masses "Made in China":A Blessing for Businesses
"Made in China":The Bitter Blessing From 'Made in China' to 'Created in China' China's tourism industry reaps golden harvest
Remedies for economic challenges  The construction of nuclear plants Rays of hope for manufacturing


Leave your comment0 comments

  1. Name


Selections for you

  1. Simulated battlefield environment drill

  2. Aircraft carrier USS George Washington docked

  3. U.S. naval vessels cruise in waters

  4. Sexy girls in China's national pole dancing team

  5. A glimpse of hard security guard training

  6. Key economic figures raise China's growth hopes

  7. 4-kg wild Ganoderma lucidum found

  8. Rare celebrity photos

Most Popular


  1. Fears that yuan rise will hit exports unfounded
  2. Tax reform crucial to stable growth
  3. No sharp decline for property prices
  4. Japan to bear consequence of breaking promise
  5. How to hard sell China's soft power
  6. Commentary: China's top spot for global FDI
  7. Commentary: Remedies for economic challenges
  8. San Francisco treaty doesn't help Japan
  9. Public angered over Chinese 'forced kowtow'
  10. Environment anger shows need for reform

What’s happening in China

Teacher abuses kids, posts photos

  1. Girls forced to sell sex, fake virginity with eel blood
  2. Hospital staff members jailed for taking bribes
  3. Pressure takes its toll on Beijingers: survey
  4. Plan to halve capital's traffic controversial
  5. Authorities gear up for poaching season