亚洲人成网站18禁止中文字幕,国产毛片视频在线看,韩国18禁无码免费网站,国产一级无码视频,偷拍精品视频一区二区三区,国产亚洲成年网址在线观看,国产一区av在线

 

S&P blow to US debt should put China on alert

By Yu Fenghui
0 CommentsPrint E-mail China.org.cn, April 25, 2011
Adjust font size:

When credit rating agency Standard & Poor revised its outlook on US sovereign debt from "stable" to "negative" a week ago, investors rushed to sell risky securities and buy gold, pushing the price up to a new all-time high of $1498.60 an ounce. European and American stock markets and oil prices were also hit.

The rating agencies have long been warning about Washington's inability to reduce the US deficit in the wake of the financial crisis, and have threatened several times to downgrade US debt. The trigger for the S&P move was the agency's belief that policymakers have yet to agree how to reverse fiscal deterioration and address long-term fiscal pressures.

Don't miss 
 What does the S&P downgrade of US Treasuries mean?

S&P explained that its switch from a "stable" to a "negative" outlook means there is a one in three chance that it will downgrade its AAA rating of US sovereign debt within the next two years. Downgrading the world's number one economic power would have an enormous impact. In the author's view, S&P's move reflects anxieties about the global economy and global sovereign debt. It will not just impact the US economy and investment environment, but other countries around the world, including China.

In terms of capital markets, volatility on Wall Street will certainly affect China's A shares, so investors in the Chinese stock market should pay additional attention to risk.

Treasuries constitute the largest segment of US sovereign debt. And the Chinese government is the world's biggest buyer of US Treasuries. In order to mitigate risk, many investors have sold stocks and treasury bonds to buy gold. This will inevitably lead to a substantial decline in US Treasuries. Those who hold the most will lose the most, and continue to shoulder the greatest risk. China should diversify its $3 trillion holdings of foreign exchange reserves to spread the risk.

S&P's revised rating may also trigger a new round of dollar devaluation. This will mean not only the devaluation of China's foreign exchange reserves, but will also hit China's exports, as hot money inflows lead to faster yuan appreciation. The US Federal Reserve's second round of quantitative easing will end in June. If it decides on a new round this will boost global inflation and deal a blow to the world economy, especially China and other emerging market countries, which are already raising interest rates.

The S&P move is a wake-up call to China not to take credit risk lightly especially in the real estate market and local government finance. China's credit looks good from a statistical point of view. But it has not been tested by major domestic economic fluctuations. We should remember the credit crisis that followed the bursting of the Hainan real estate bubble in 1990s. And also recall Warren Buffett's famous quote: "It's only when the tide goes out that you learn who's been swimming naked."

(This article was first published in Chinese and translated by Li Huiru.)

Opinion articles reflect the views of their authors, not necessarily those of China.org.cn.

Print E-mail Bookmark and Share

Go to Forum >>0 Comments

No comments.

Add your comments...

  • User Name Required
  • Your Comment
  • Racist, abusive and off-topic comments may be removed by the moderator.
Send your storiesGet more from China.org.cnMobileRSSNewsletter
    1. <ul id="556nl"><kbd id="556nl"><form id="556nl"></form></kbd></ul>
      <thead id="556nl"></thead>

      1. <em id="556nl"><tt id="556nl"></tt></em>
        <ul id="556nl"><kbd id="556nl"><form id="556nl"></form></kbd></ul>

        <ul id="556nl"><small id="556nl"></small></ul>
        1. <thead id="556nl"></thead>

          亚洲人成网站18禁止中文字幕,国产毛片视频在线看,韩国18禁无码免费网站,国产一级无码视频,偷拍精品视频一区二区三区,国产亚洲成年网址在线观看,国产一区av在线 人妻无码久久影视 日韩久久久久久久久久久久 精品国产香蕉伊思人在线 无码国产手机在线a√片无灬 91在线视频无码