Fed Throws China a Curveball Just When It Seeks Stability
- Communist Party celebrates 100th anniversary on July 1
- Global market volatility threatens to spill into China
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China’s capacity to maintain stability in its financial markets is being tested by the Federal Reserve’s sudden hawkish shift.
Beijing has repeatedly voiced concern that liquidity-fueled bubbles overseas would burst when monetary conditions finally started to tighten. Bullish speculation domestically already prompted intervention by Chinese authorities, particularly in commodities. As such, a move by the Fed that starts to head off such a risk would be welcomed by the Communist Party, if its 100th anniversary wasn’t days away.