US & China to blame for financial turmoil in emerging markets

[xhw1986]

By rights, the United States and China, the two largest economies in the world, should have been the cornerstone of stabilizing the world's economy but instead they have become a source of financial turmoil in the emerging markets.

Since January, stock and foreign exchange markets in Asia, Eastern Europe and Latin America have tumbled with the progressive withdrawal of the United States' quantitative easing program, as well as the structural adjustments in and the lackluster performance of the Chinese manufacturing sector.

The depreciation of currencies in emerging countries hurt stock markets in Europe and the United States on Jan. 24. Financial analysts and the media attributed the depreciation in currencies in emerging markets to China as its Purchasing Managers' Indexes (PMI) in the manufacturing sector dropped by 50.5 points in December to 49.6 in January.

The economic contraction in the emerging markets, including Latin America, Eastern Europe and South Africa will be more severe when China's economic growth slows down because of their growing reliance on China, based on closer trade ties during recent years.

In addition, the international hot money flows from the US Federal Reserve's quantitative easing program have resulted in the recent turbulence seen in the international stock and foreign exchange markets.

The governor of Taiwan's central bank, Perng Fai-nan, said last year that the European Union and the United States had printed lots of money in order to save their own economies, but this disturbed global financial markets.

Perng tried to raise public awareness in a letter written in December 2013, which stated that the global financial market was entering another period of turbulence. Although Taiwan has no foreign debt, it faces stagnant exports and a sluggish economy. Taiwan's growing dependence on trade ties with China will also mean it will inevitably bear the impact of the turmoil in the stock and foreign exchange markets caused by the hot money flows. The United States and China tried to save their own economies regardless of the stability of other countries.

Taiwan still holds a positive outlook for the revival of its economy, but we'd rather stay conservative given the financial turmoil in emerging countries.

The Taiwanese government and enterprises should make good use of the Lunar New Year holiday to evaluate the possible impact of the withdrawal of the quantitative easing program and the slowdown in the Chinese economy to avoid losses resulting from market unrest.

US, China to blame for financial turmoil in emerging markets｜Editorials｜Opinion｜WantChinaTimes.com

 

[Hypersonicmissiles]

Oh it's time for the 'let's-all-blame-it-on-China'.

 

[tranquilium]

How the hell did you come up with idea that Chinese manufacturing is to blame? News flash, end of January and beginning of February is slow season for Chinese throughout the entire freaking Chinese history, because it is the time of spring festival and everyone is taking time off from work.