People Daily (overseas edition) published an article to reflect Chinese scholars’ opinions on U.S. Federal Reserve Chairman Ben Bernanke’s recent hint that the U.S. may implement a third round of quantitative easing of monetary policy. Zhou Xiaochuan, Director of the Bank of China, asserted that the U.S. should shoulder more responsibilities and not just consider the economic needs of the U.S. [when it prints dollar bills]. The U.S. quantitative easing of monetary policy will result in capital moving into other emerging economic entities, making it more difficult for these nations to control inflation. The Vice President of Chengdu University, Zhang Qizuo, expressed the belief that the U.S. adopts the tactic of inflation and devaluing the dollar to covertly default on its debts so as to shift the risk of the U.S. debt crisis to others. This is the ultimate and biggest risk for global investors. Yu Yongding, a member of the Chinese Academy of Social Sciences, noted that China is the biggest creditor in the world. The biggest victims of U.S. currency devaluation are its creditors.
[Ed. Contrary to Chinese media reports, many Western media indicate QE3 is unlikely during an election year.]
Source: People’s Daily, April, 4, 2012
Reuters, April 3, 2012