Early Thursday morning in Asia, China’s Global Times (GT) criticized the US Federal Reserve’s latest monetary policy decision. The news piece mentioned that the US’ massive liquidity stimulus plan will not only increase the US government’s debt to its people, but also to the world.
Key quotes
China has announced its annual macro-economic policy outline, which recommends implementing the policy focused on people’s livelihoods and employment, rather than Western countries’ large-scale stimulus plans.
The 1 trillion yuan ($141 billion) of national debt and 1 trillion yuan of special national debt newly issued by the central government to fight the pandemic will go directly to cities and counties.
As for monetary policy, this year’s Government Work Report stressed precise facilitation, with funds going directly to small, medium and micro-sized businesses that have been severely hit by COVID-19.
Compared to Western countries’ trillions of dollars worth of stimulus plans, China, based on favorable economic fundamentals, has adopted prudent fiscal and monetary policies for post-pandemic economic recovery.
The country’s economy has shown signs of a V-shaped recovery, and a yearly positive growth is achievable so long as the country doesn’t see a large-scale resurge in infections in the second half of the year.
FX implications
As markets are yet catching a breather after the US Federal Reserve monetary policy meeting, the news failed to offer any major moves. However, it does signal the US-China tussle and might exert additional burden on the risk catalysts as markets in Asia gain momentum in a few hours.