Immediately after the U.S. Federal Reserve announced the interest rate increase, Xinhua published a series of six commentaries on the matter. The commentaries generally indicated that the Fed’s interest rate hike will trigger major global financial market adjustments. Xinhua pointed out that the U.S. economy holds a 22 percent weight in the global economy and the U.S dollar is used in 60 to 80 percent of the global trade. Thus, the United States has been benefiting a lot from the dollar’s reserve currency position. The U.S. should not forget where those extra profits came from. One of the commentaries suggested that some countries, especially some emerging economies, may suffer financial turmoil due to their high debt ratio. Xinhua also questioned whether the U.S. economy is capable of sustaining the rapid future interest rate increase plan that the Fed laid out. Some commentaries concluded that the projected increases next year may “disrupt global markets.” The Chinese stock, bond, and foreign exchange markets all suffered significant declines after the Fed’s announcement.
The Xinhua commentaries (December 15, 2016):
The Global Economy Should Be Concerned about the Risks from the Pace of the Fed’s Rate Hikes
The U.S. Should Bear Its Global Responsibilities as the World’s Primary Reserve Currency Issuer
The RMB Exchange Rate Has Its Own Rhythm to Maintain Long-term Stability
Will the U.S. Fed Rate Hike Affect the Chinese People’s Pocketbook?
We Need to Take Good Care of Ourselves with or without A U.S. Interest Rate Hike
China’s Macroeconomic Policy Needs to Balance among Multiple Objectives after the U.S. Interest Rate Hike