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William Pesek

Janet Yellen Takes a Back Seat to China

Washington has less sway over the global economy.
Moving in on her turf.

Moving in on her turf.

Photographer: SAUL LOEB/AFP/Getty Images

Traders have been panicking over the sudden rise in global bond yields triggered by the expected tapering of the Federal Reserve's stimulus programs. But an unlikely savior may emerge to limit the damage: China. That's the view of researchers at Oxford Economics, who think the world's second-largest economy is starting to eclipse the United States as the most influential player in setting global borrowing costs.

As the world's largest trading nation and holder of currency reserves, China has long held sway over economic activity in places ranging from Brazil to Indonesia. What's new is that the country's influence over global bond markets is beginning to eclipse that of the Federal Reserve. While traders still keep a close watch on decisions made by Fed Chair Janet Yellen in Washington, economic shifts in China are starting to matter even more for the global economy.