China Faces Little Impact from US Tightening: Guan Tao

China faces limited impact from the imminent tightening policies by the Federal Reserve even as the two governments’ bond yields continue to narrow, Guan Tao, the global chief economist at Bank of China International, wrote in the 21st Century Business Herald. The yuan continued to surge despite two rounds of RRR cuts by the PBOC this year, lending evidence of the currency’s strength, said Guan, a former PBOC official. China has laid political support for faster growth next year, which will allow it to be more resilient to external impact, said Guan. China should allow the yuan’s exchange rates to be more flexible and have freer movement both ways, which helps absorb internal and external impacts, said Guan. To keep the exchange rates more stable, China should develop its forex market and further widen connections with external markets, Guan wrote.