Chinese economy to rebound in the coming months with stronger policy support despite the negative impact of tight US monetary policy

Posted on May 11, 2022 |

The US Federal Reserve increased the target federal funds rate on Wednesday by one-half of 1%, to between 0.75% and 1%, which is the 2nd hike this year and its biggest in 22 years to tamp down the inflation level in the US.
The decision could reduce global liquidity and put pressure on capital outflows and currency depreciation in many developing economies.
However, for China, the country's vast domestic economy, large foreign exchange reserves, and a steady trade surplus provide a cushion against the spillover effects of US tightening.
China has taken a step to stabilize the economy at the meeting of the Political Bureau of the Communist Party of China Central Committee on April 29 to step up macro policy adjustments.
The central bank pledged on Wednesday to formulate new policy tools at an early date to stabilize economic growth, employment, and price levels.
The impact of the COVID-19 outbreak is slowly fading with the restoration of supply chain activity, while infrastructure construction has maintained a positive expansion rate in April and helped offset downward economic pressures.

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