What is the impact of the U.S. quantitative easing policy on China s economy?

The depreciation of the US dollar and the rise of dollar-denominated commodities have been lowered, resulting in imported inflation.

Moreover, the depreciation of the US dollar will also hinder China's exports, the investment environment will deteriorate, the expectation of RMB appreciation will increase, hot money will flow in, and the economic bubble will expand.

Legal analysis: First, China's dollar assets have shrunk severely. China's foreign exchange reserves now exceed one trillion US dollars, of which US dollar reserves account for about 70%, and China has purchased more than $900 billion in US Treasury bonds.

The U.S. "quantitative easing" has depreciated the U.S. dollar sharply, resulting in heavy losses in China's U.S. dollar assets. From June to early November 2010, the U.S. dollar depreciated by 3% against the renminbi, costing China's foreign reserves and holdings of U.S. Treasuries $54.6 billion and $27 billion, respectively.

The second is to impact China's foreign trade exports. For every percentage point of appreciation of the renminbi against the dollar, China's foreign trade exports will fall to. As a result, the imbalance in China's import and export growth has intensified, with the growth rate of exports far lower than the growth rate of imports, and the foreign trade surplus tending to shrink.

The third is to exacerbate inflation in China. The U.S. move has pushed up international commodities. China's already high inflation rate has risen further since November 2010 due to imported inflation.

At the same time, China's cost of paying for imports has increased significantly. For example, due to international oil prices, China will need to spend billions of dollars more on oil imports every year in the future.

Fourth, bear the risk of more international hot money inflow. Experts estimate that 40 percent of the $600 billion issued by the United States will flow into China through various channels. The influx of hot money will exacerbate the asset bubble in China's capital market, leaving evil consequences and hidden dangers for China's economy.

Legal basis: Regulations of the People's Republic of China on the Administration of Renminbi

Article 2 The term "renminbi" as used in these Regulations refers to currency issued by the People's Bank of China in accordance with law, including banknotes and coins.

Those engaged in the design, printing, issuance, circulation and other activities of the renminbi shall comply with these Regulations.

Article 3 The legal tender of the People's Republic of China is the Renminbi. No unit or individual may refuse to accept all public and private debts within the territory of the People's Republic of China in renminbi payment.

Legal Analysis:1increasing China's surplus and GDP;

2.increasing inflationary pressures in China;

3.This led to an increase in the number of currencies in China.

Legal basis: Article 3 of the Banking Supervision Law of the People's Republic of China The objective of banking supervision and administration is to promote the lawful and sound operation of the banking industry and maintain the public's confidence in the banking industry.

Banking supervision and administration shall protect fair competition in the banking industry and enhance the competitiveness of the banking industry.

Quantitative easing mainly refers to the intervention method in which the bank buys medium and long-term bonds, increases the base money supply, and injects a large amount of liquidity into the market after the implementation of the zero interest rate or near-zero interest rate policy, so as to encourage spending and borrowing, which is also simplified as indirect printing of money. The ** bonds involved in the quantitative easing policy are not only large in amount, but also have a long period. In general, monetary authorities will only resort to such extremes if conventional tools such as interest rates are no longer effective.

Legal basis: People's Bank of China Law of the People's Republic of China

Article 4 The People's Bank of China shall perform the following duties:

1) To formulate and implement monetary policy in accordance with the law;

2) Issuing RMB and managing RMB circulation;

3) To approve, supervise and manage financial institutions in accordance with regulations;

4) To supervise and manage the financial market in accordance with regulations;

5) To issue orders and regulations relating to financial supervision and management and operations;

6) Holding, managing and operating the country's foreign exchange reserves and reserves;

vii) Manager of the State Treasury;

8) Maintain the normal operation of the payment and clearing system;

9) Responsible for statistics, surveys, analysis and analysis of the financial industry;

10) To engage in relevant international financial activities as the state's leading bank;

11) Other duties as specified in ***.

The People's Bank of China may, in order to implement monetary policy, engage in financial business activities in accordance with the relevant provisions of Chapter IV of this Law.

Article 5 The decisions made by the People's Bank of China on the annual monetary amount, interest rate, exchange rate, and other important matters stipulated in the **** shall be implemented after being submitted for approval.

After the People's Bank of China makes a decision on other relevant monetary policy matters other than those provided for in the preceding paragraph, it shall implement it and report it to the People's Bank for the record.

The People's Bank of China shall submit to the Standing Committee of the National People's Congress a work report on the situation of monetary policy and financial supervision and management.

Article 7 The People's Bank of China independently implements monetary policy, performs its duties, and conducts business according to law under the leadership of the People's Bank of China, and is not subject to interference from localities, departments, social groups, and individuals.

Article 8 The entire capital of the People's Bank of China shall be funded by the state and belong to the state.

On the volume side, ample dollar investors will flow to emerging markets with positive investment prospects, such as China. During the Fed's QE, global risk assets tend to usher in a strong ** cycle. From the perspective of **, the Fed's "zero interest rate, quantitative easing" policy will objectively lead to a weakening of the dollar and a decline in US Treasury yields.

This will further push USD investors to chase assets with higher expected yields. In the process, non-US currencies typically strengthen, including the Chinese yuan. During both periods of quantitative easing, the global** market achieved considerable gains.

During the same period, the renminbi appreciated.

Legal basis: Foreign Affairs Law of the People's Republic of China

Article 38: To initiate an external investigation, the competent department for external affairs shall issue an announcement. Investigations may be conducted by means such as written questionnaires, convening hearings, on-site investigations, or commissioned investigations. Based on the results of the investigation, the competent department of foreign affairs shall submit an investigation report or make a ruling on the disposition, and issue an announcement.

Article 39: Relevant units and individuals shall cooperate with and assist in external investigations. The competent department for foreign affairs and other relevant departments and their staff shall conduct external investigations, and shall have the obligation to keep confidential the state secrets and commercial secrets that they are aware of.

Indirectly caused the over-issuance of China's currency, the impact of which is self-evident.

The dollar depreciated, dollar holders sold dollars and bought resources1 The cost of Chinese factories increased and eroded profits.

2 Prices**, people have taken out their deposits for speculation, further increasing prices**.

3 **Austerity policy, price suppression**.

Since the outbreak of the financial crisis in 2008, the United States has implemented rounds of quantitative easing, and the long-term benchmark interest rate has remained at a level close to zero, which has contributed a lot to the recovery of the US economy and shake off the shadow of the financial crisis. A weaker dollar is in the short- and long-term interests of the United States. Therefore, the United States has been reluctant to withdraw from the monetary policy of quantitative easing.

If the Fed is afraid of the emergence of financial bubbles and the overheating of the virtual economy and the potential for inflation, the Fed will do more harm than harm to China. One of China's biggest headaches at present is that the super monetary policy of multiple rounds of quantitative easing in the United States has greatly depreciated the trillion yuan of foreign exchange reserves as of the end of last year. If the U.S. quantitative easing policy is stopped, then the pressure to maintain value will be greatly eased.

This is one of the favorable factors.

China's price index climbed in April 2013, and there were signs of a new round of prices, one of the driving factors was imported inflation such as international commodities. The rise in international commodity prices has a lot to do with the depreciation of the US dollar due to the release of US dollars, because international commodities are measured and denominated in US dollars. If the US quantitative easing policy is stopped, the dollar will stop depreciating, and China's imported inflationary pressure will be greatly reduced.

This is the second positive factor.

The third favorable factor is that the pressure on RMB appreciation has been reduced, and the dilemma of monetary policy has become less difficult. At present, the continuous appreciation of the renminbi is passive, mainly due to the continuous depreciation of the US dollar.

If the U.S. quantitative easing policy is stopped, the dollar will stop depreciating, and the pressure on the renminbi will naturally decrease. In terms of stable growth, it will be of great benefit to the recovery of China's export economy and will bring substantial benefits to domestic export enterprises.

The two unfavorable factors are that after the Fed's quantitative easing exit, the appreciation of the US dollar will lead to the relative depreciation of the RMB, which may cause China's domestic hot money to retreat in a big way, and China should pay close attention to and prevent the impact it brings, which is one of them.

Second, the Chinese aunts who are crazy about buying ** have the greatest impact. The United States quantitative easing will gradually be withdrawn, the dollar will gradually strengthen, and the dollar-denominated ** will enter a medium and long-term downward channel, and even bring "catastrophe" to ***. This does not rule out the possibility that short-selling institutions such as Goldman Sachs and the Fed may join forces to calculate investors, including Chinese aunts.

Remind Chinese aunts and other investors who buy physical goods to pay close attention to the dynamic trend of the Federal Reserve's withdrawal from quantitative easing, prevent investment losses, and prevent being calculated by it.

The depreciation of the US dollar The US dollar is the main foreign exchange reserve of many countries, which is equivalent to the United States sucking the wealth of other countries.

The U.S. has implemented quantitative easing monetary policy, interest rates have remained low for a long time, and China is likely to follow the lead of the United States, and China's monetary policy should remain relatively loose in the near future, at least not tightening. Otherwise, the pressure of RMB appreciation will be greater, affecting exports and seriously impacting the domestic manufacturing industry. At this stage, China's real estate bubble and inflation are difficult to be serious, and have reached the extent that they must be managed, and the U.S. monetary policy will exacerbate the real estate bubble and China's inflation.

On the other hand, China is the largest creditor of the United States, and the United States has maintained a loose monetary policy for a long time, released liquidity, and increased the supply of dollars.

I need to prevent inflation again, and I need to buy more U.S. Treasury bonds.