(Yicai Global) Dec. 16 -- The US Federal Reserve rate hike came in line with expectations and there could be three more similar moves by the Fed in 2017. China's state-owned Xinhua News Agency run a succession of analytical commentaries, stating that the rate hike by the Fed will draw investors' money from emerging economies toward the US, exerting extra pressure over the asset markets in emerging economies. However, the yuan will remain stable over the longer term and China's macroeconomic policies will aim to achieve balance in the economy, Xinhua predicted.
State-run news agency published six commentaries on the Fed hike yesterday, stressing that the US should live up to its global obligations as the world's largest economy and the issuer of the main reserve currency. If the Fed raises rates too often, it will adversely affect less-solvent countries with weak economic fundamentals and heavy reliance on foreign financing, and may even drag them into a financial crisis or recession. The impact would also be passed on to the US through trade and financial channels, undermining the economic recovery and financial stability in the US, it commented.
Xinhua also analyzed possible impact of the Fed rate hike on the Chinese economy, stressing that the yuan will sag further against the dollar, but this would not change the status of the yuan as a global currency. The rate hike has an insignificant impact on the general public, Xinhua said. Furthermore, given the capital control measures adopted by China and the unique operations of the Chinese economy, the Chinese real estate and stock markets would not be strongly affected by the Fed rate hike.
The Chinese economy is currently at the stage of critical transitions, and changes in the US monetary policy and the resulting fluctuations in external variables such as prices and exchange rates thus make economic policy-making more difficult in China, wrote Xinhua News Agency in a commentary quoting a government economist. Going forward, the Chinese macroeconomic policy will focus on striking a balance and coordination between multiple objectives, it said.