In ‘finance war’ with US, former official says China risks staring down the barrel of a capital conundrum
- High-profile economist and former State Council researcher warns that potential US capital injections in China, following any Fed rate cuts, might be tumultuous for already-battered markets
- China is at a financial disadvantage and in ‘a state of being contained, suppressed and harvested’, Chen Wenling says
A former Chinese official has warned that the nation must steel itself in the midst of a “finance war”, and as anticipated interest rate cuts by the US Federal Reserve could lure a large amount of money back to China and potentially trigger fresh turbulence in the domestic financial market.
“We must prevent large-scale malicious speculation to harvest China’s high-quality assets or [the injection of US capital] causing trouble in the Chinese stock market,” said Chen Wenling, chief economist at the China Centre for International Economic Exchanges, a Beijing-based governmental think tank.
Chen, who worked as a senior official with the Research Office of the State Council from 1999-2010, made her comments in an interview with the Guancha.cn news portal this week.
Nonetheless, Chen expects that the world’s second-largest economy will be buoyed by a more vigorous capital market this year as foreign investors likely flock back to China due to interest rate trends.