Traders work on the floor of the New York Stock Exchange. Photo: AFP
Wall Street’s main indexes fallen steeply on Monday, with the NASDAQ Composite dropping 1.09 percent and the S&P 500 losing 0.39 percent. Meanwhile, the US dollar index, which measures the greenback against six major peers, surged 0.85 percent amid risk-averse sentiment.
There are too many economic factors that can be cited to explain the current volatility in the US financial markets. But very strangely, a Reuters report cited concerns over China’s anti-epidemic measures as the main cause of the US stock market loss.
It is not uncommon for Western media outlets to blame China for various economic problems in the US and other Western countries, but it still seems too far-fetched to attribute the US stock market losses mainly to China’s anti-epidemic measures, especially at a time when the US economy is heading toward a potential recession due to a confluence of domestic problems including aggressive monetary tightening.
There is no denying that how the Chinese economy performs will have a major impact on the US economy and the world economy as a whole, given China’s colossal economic size, massive market scale and manufacturing power. China has become the top trading partner for more than 120 countries and regions, with the interests of its supply chains closely intertwined to all parties in the world. Just as China’s economy has impact on the US, the US economy also affect China’s economy.
Yet, compared with China’s battle against COVID-19 that has largely helped minimize both human and financial losses, hawkish words and deeds by the US’ own Federal Reserve seem more likely to precipitate a stock rout as investors are apparently more concerned about the impact of monetary tightening on the US economy.
In the latest sign that the Fed may not slow its pace of interest rate increases, St Louis Fed President James Bullard last week said the Fed should raise interest rate to at least 5 to 5.25 percent to combat inflation, well above the current rate levels of 3.75 to 4 percent. Bullard is not the only Fed official that has expressed openness to the Fed’s aggressive rate hikes.
Moreover, considerable inflationary pressure remains despite latest data showing that US inflation cooled in October by more than what was expected. The consumer price index surged 7.7 percent in October from a year earlier. As things stand, inflation is the biggest problem facing the US economy, and also the biggest factor affecting its financial markets.
Needless to say, blaming on others for its own economic woes will not help the US address those considerable problems. But it has apparently become the US’ and the broader West’ playbook amid their profound ineptness in tackling their own problems – blaming China for everything.
When it comes to responsibility, the world knows very clearly that it is the US that is exporting economic crises to other countries through its irresponsible domestic economic policies and reckless sanctions and other unilateral actions against other countries.
If anything, there is every reason to be concerned about the prospects of the US economy and the consequences it has brought to the world. For starters, the Fed’s aggressive rate hikes this year, aimed at easing high inflationary pressure, is in fact taking advantage of the hegemony of the US dollar to export the crisis to the world, forcing the world pay for the consequence of the US’ blind and unlimited money printing in previous years.
Still, as it has become clear, the transfer of its own crises to other countries will not help the US address its own economic problems, but will actually further aggravate its structural contradictions.
Moreover, the US’ attempt to promote a technology “decoupling” from China has actually hurt the US economy. The recent market rout suffered by US tech stocks is already indicative of the fact that “decoupling” will only lead to a lose-lose situation. Many of the US tech giants rely heavily on revenue from the Chinese market. A basket of tech stocks compiled by Goldman Sachs is down 62 percent this year, while the NASDAQ 100 is down 29 percent, according to Bloomberg.
By comparison, the fundamentals of the Chinese economy, characterized by resilience and long-term sustainability, remain unchanged, despite the short-term impact of the epidemic.
Foreign direct investment into the Chinese mainland, in actual use, expanded 14.4 percent year-on-year in the first 10 months of this year, according to data from the Ministry of Commerce. Compared to some Western media outlets’ bias when it comes to the Chinese economy, global capital flows are a much more accurate reflection of the great prospect of the Chinese economy.
For the sake of the world economy, the international community, including global media, should focus on real problems in the US and hold US officials accountable for their disastrous policies that have not only hurt US businesses and consumers but have also caused profound damages on the global economy.
