11 December 2018

Study shows China unscathed by US taper, Xinhua says

A World Bank study suggests that the tapering of the United States quantitative easing (QE) program will have relatively less impact on China cpmpared to other developing nations, Xinhua news agency reported Wednesday. The announcement of tapering of the QE program has not been disruptive, Andrew Burns, acting director of the World Bank’s economic prospects group and lead author of the twice-yearly Global Economic Prospects, was quoted as saying at a news conference in London. Burns said the report looked at what would happen to capital flows to developing countries if long-term interest rates in the US were to jump up by 100 basis points in response to QE. “If that were to occur it would be disruptive, and we would see a decline in capital flows to developing countries by as much as 50 percent for a short period of time,” he said. However, China would be relatively unaffected, he said, noting that China receives most of its inflows through foreign direct investment, rather than bond flows or equity flows that are more sensitive to the tapering. 

– Contact HKEJ [email protected]



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