China has cautioned the U.S. and other developed nations to carefully evaluate the consequences of their economic and financial policies. “The economic and financial policies of the U.S. are the biggest risk to worldwide financial stability,” according to the Chinese Ministry of Foreign Affairs.
China Sounds Warning About U.S. Economic and Financial Strategies
Wang Wenbin, a representative for China’s Ministry of Foreign Affairs, raised concerns about the condition of the global economy during a press conference Thursday.
Commenting on the latest International Monetary Fund (IMF) Global Financial Stability report which indicated that the chaos in the U.S. banking sector has increased the danger of global financial instability, the Chinese official said: “Global financial stability is linked to the recovery and growth of the world economy and the shared interests of all countries, and needs the combined efforts of the world.”
Noting that “The noticeable global financial risks are largely related to the aggressive adjustments of the monetary policies in the U.S. and other developed countries,” Wenbin added:
Many in the international community are of the opinion that the economic and financial policies of the U.S. are the biggest risk to global financial stability. The huge interest rate hikes by the U.S. Federal Reserve since last year have significantly increased global financing costs and intensified irregular international capital movements.
“This has not only resulted in the bankruptcy or acquisition of some banks in the U.S. and Europe, but also made life more difficult for emerging markets and developing countries, which is not beneficial to the stability and recovery of the world economy and common growth of the world,” the Ministry of Foreign Affairs spokesman said.
“Studies show that commercial creditors from developed countries hold almost half of the debt of debt-ridden countries in the world. Since last year, the higher rates of interest from developed nations including the U.S. have increased the debt burden of the countries concerned, trapping them in a vicious circle of debt repayment and leaving them vulnerable to debt default,” the Chinese official continued, emphasizing:
We urge the U.S. and other developed countries to cautiously assess the consequences of their economic and financial policies, stabilize market expectations promptly, and avoid bringing about negative shocks to global financial stability.
“At the same time, we urge developed countries to give attention to the actual needs and concerns of developing countries, provide real assistance to countries in need, stop paying lip service and shirking their responsibilities, and take the initiative to maintain global financial stability and promote global economic recovery,” he concluded.
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