[Looking at the United States] The anxious US economy is making the world pay for it

　　Zhongxin Finance, May 18 (Shen Jincheng Gong Hongyu) "The price increase of goods in the store is too outrageous." Ah Jah (pseudonym) from New Jersey, USA said that every time she went to the supermarket this year, she was shocked by the skyrocketing prices. .

　　High inflation has severely impacted the lives of ordinary people in the United States, and some families have even experienced financial crisis.

In order to curb inflation and quell public grievances, the Federal Reserve has raised interest rates twice this year, setting a record for the first time since 2000 to raise interest rates by 50 basis points, and announced that it will begin to shrink its balance sheet in June.

　　This series of aggressive austerity actions is setting off a chain reaction on American soil.

What's more worrying is that it is not just the United States that will suffer the pain caused by the relevant policies.

Data map: Eggs on a supermarket shelf in the United States.

Photo by China News Agency reporter Liu Guanguan

Historic U.S. tightening policy may turn out to be less than expected

　　"Obviously what the government will do to change the status quo, but how effective it will be, no one knows," Ah Jah said.

　　One week after the Fed’s second round of interest rate hikes, the U.S. Labor Department disclosed data showing that the U.S. CPI in April was 8.3 percent year-on-year, down 0.2 percentage points from the previous month.

The upward trend of US prices has not been reversed, and the increase is still at a record high.

　　Although the original intention of the Fed to raise interest rates is to curb inflation, its "side effects" are faster and more obvious than the positive effects.

　　The first to tremble was the U.S. financial market.

The day after the Fed announced a rate hike, U.S. stocks plunged.

The Dow and S&P 500 fell more than 4% at one point, and the Nasdaq fell more than 6%.

Although U.S. stocks have shown signs of rebounding since mid-May, coupled with the haze of confidence that existed before the interest rate meeting, in the past 20 days, the Dow Jones Index has fallen by 6.36%, the Nasdaq has fallen by 13.52%, and the S&P 500 It fell by 8.74%.

　　Considering that the U.S. economy is highly dependent on the capital market, He Ping, deputy dean of the School of Economics and Management of Tsinghua University and professor of the Department of Finance, pointed out in an interview with Zhongxin Finance that the decline of the U.S. stock market will have a certain negative impact on corporate financing.

　　Li Xunlei, chief economist at Zhongtai Securities, pointed out that in the past decade, many U.S. listed companies borrowed money at very low interest rates to repurchase their own shares and cancel them, thereby indirectly increasing the yield per share.

After the Fed continues to raise interest rates, the actual controllers of these listed companies will not be able to continue to achieve low-cost arbitrage.

　　In addition, the real estate market in the United States may also be affected.

Li Xunlei said that from the historical data, the rise in mortgage interest rates will increase the cost of housing purchases for residents, curb purchase demand, put pressure on the real estate market, and bring down housing prices.

Data map: New York, USA.

Photo by Zhongxin Finance and Economics Gong Hongyu

The effect of the Fed's rate hike is "spillover", hitting emerging economies

　　Many analysts believe that the aggressive pace of interest rate hikes by the Federal Reserve will not only bring challenges to the United States, but will also cause the world economy to operate under pressure in many aspects.

　　First, raising interest rates will have an impact on the economic growth of emerging economies.

Li Xunlei explained that since emerging economies are mostly in the low-end industrial chain and have greater dependence on developed countries, the loosening or tightening of US monetary policy will have a great impact on these countries.

For example, in the three periods of 1986-1989, 1995-1998 and 2014-2015, the growth rate of countries other than the United States declined significantly, especially emerging economies excluding China, while the economic growth rate of the United States was relatively high and more stable.

　　In addition, the impact of US interest rate hikes on emerging economies may also be transmitted through the debt chain.

Zhang Monan, chief researcher of the Institute of American and European Affairs of the China Center for International Economic Exchanges, pointed out that the external debt ratio of emerging economies is usually relatively high.

　　More worryingly, it will not be easy for emerging economies to try to absorb the negative impact of U.S. policy on economic growth.

　　As Zhang Monan said, on the one hand, in order to maintain balance, some countries follow the US to adopt austerity policies.

But emerging market economies have weaker growth prospects than advanced economies, which could bring a tightening effect in the absence of room for monetary policy adjustment.

On the other hand, the fiscal revenue and tax revenue of most emerging economies and developing countries have decreased due to the economic slowdown, which makes it more difficult for them to adjust their economies by expanding fiscal policies.

　　In addition, in the foreign exchange market, Li Xunlei said that with the pace of interest rate hikes in the U.S. dollar, the U.S. dollar index will also rise, and other currencies will be under pressure to depreciate.

　　In addition to the impact on the macro level, Zhang Yansheng, chief researcher of the China Center for International Economic Exchanges, also mentioned that sharp interest rate hikes by the Federal Reserve may bring negative effects to private borrowing.

Coupled with factors such as high inflation in the United States, the conflict between Russia and Ukraine, and the new crown epidemic, many companies may not be able to repay their debts on time, triggering large-scale debt defaults.

On April 12, local time, a car passed by a price sign at a gas station in San Mateo County, California.

Photo by China News Agency reporter Liu Guanguan

The U.S. economy may have a hard landing, and

　　The slow process of defusing inflation in the United States, the negative economic growth in the first quarter, coupled with the "turning off effect" of interest rate hikes on economic growth, many people are worried about whether the United States can land safely from the economic difficulties.

　　Some voices believe that although the smooth resolution of the brewing crisis is the original intention of the United States, the policy results may not be satisfactory.

　　He Ping pointed out that the

At the same time, the external economic environment facing the United States is also different today.

For example, the United States has imposed tariffs on goods from China and other countries, which has also pushed up the prices of foreign products imported by the United States, which is not conducive to its control of inflation.

　　Li Xunlei is also skeptical that the Fed's rate hikes can help the United States out of the quagmire.

In his view, the Fed's current rate hike-shrinking cycle is different from the capital market situation in the previous cycle.

This round of U.S. economic hard landings is riskier and the stock market bubble is bigger.

　　In the face of the "time bomb" of the US economic crisis, experts believe that the world economy also needs to prepare for the long-term impact of Fed rate hikes and balance sheet reductions.

　　"Currently, there is a risk of stagflation in the world. Although the current U.S. consumer spending and corporate fixed asset investment maintain strong resilience, high inflation is the main risk to the current U.S. economic growth, which not only weakens spending power and consumer confidence. , and will further affect corporate investment as the Fed tightens policy. It is not easy for the United States to achieve a 'soft landing'." Zhang Monan said.

　　The high inflation in the US economy will undoubtedly affect the world economy.

Cui Fan, a professor at the School of International Business and Economics at the University of International Business and Economics, pointed out that the record trade deficit in the United States accompanied by high inflation has brought inflationary pressure to other countries.

The Fed's hike in interest rates and shrinking of its balance sheet may bring about capital flight, shrinking foreign exchange reserves, exchange rate depreciation and inflation for some developing countries.

　　"Raising interest rates and shrinking the balance sheet is difficult to suppress the inflation rate to the pre-epidemic level. Only slightly higher than the traditional inflation rate can the U.S. guarantee the economic growth rate. In the end, the U.S. inflation rate and interest rate may be higher than the traditional level. While the world economy We need to prepare for this, and the process will be accompanied by the value chain adjustment that the United States itself expects to bring manufacturing back to the United States," Cui Fan said.

Data map: New York, the United States, people line up for testing at a new coronavirus testing point in Times Square.

Photo by China News Agency reporter Wang Fan

How can emerging economies break through and mitigate the impact of the United States?

　　Cui Fan pointed out that for emerging economies, an appropriate devaluation of the exchange rate has the effect of promoting exports.

In addition, although it is difficult for a currency to replace the dollar's hegemony in the short term, if the US trade deficit persists and the economic deficit remains high, other non-US currencies may play a greater role.

The U.S.'s use of the U.S. dollar as a means of sanctions will also hurt itself, and other countries have to consider currency security and seek more diversified and more secure asset allocation.

　　In He Ping's view, if emerging economies can adopt relatively independent monetary policies to maintain stable economic operation, they can avoid the global ups and downs, avoid systemic risks, and make greater contributions to the stability of the world economy.

　　Taking China as an example, China's current implementation of a "me-based" monetary policy will help the Chinese economy maintain an independent and stable operation, and provide more safe haven space for the world economy.

　　Zhang Yansheng believes that the Fed's interest rate hike will have limited impact on China.

Different from the sharp rise in prices in Europe and the United States, my country's prices have been running in an overall reasonable range since the beginning of this year. In April, the CPI rose by 2.1% year-on-year, which was significantly lower than that of other major economies.

In terms of exchange rate, Cui Fan pointed out that China's current account surplus is currently relatively high, and the actual use of foreign capital is still growing at a relatively high rate. In the medium and long term, the RMB has no basis for continuous depreciation.

　　"We hope that the global economy can recover quickly. The world economy is a closely connected whole. If the United States does not perform well and there is a hard landing, it will also be bad news for the world," He Ping said.

(Finish)