The Fed pauses interest rate hikes, will Chinese assets rise?Such a simple and crude question, I can only use my superficial cognition to rub this hot spot, if you think the analysis can make a little sense, thank you for your support and encouragement. If you feel that it is full of loopholes, welcome to discuss.
First of all, the Fed pauses interest rate hikes, which means that the dollar will continue to be as strong as it was when the interest rate hike was raised**, at least in attracting assets**The momentum of the dollar will gradually decline. Under the premise of maintaining the current monetary policy. We will see a gradual tendency for international investors to hold RMB. Judging from the facts that the market is showing at the moment, it is clear that the RMB exchange rate has begun to strengthen. That is, the US dollar against the yuan is gradually showing a ** trend.
If this trend continues, it will obviously shape the performance of the appreciation of the RMB in the international market. China's interest rate cut is to stimulate the economy, on the one hand, to stimulate domestic demand, and on the other hand, to stimulate exports to digest overcapacity. Then once the Fed still stops raising interest rates, this favorable situation will change, and this change will take a process. That is, gradually, with the strengthening of the RMB exchange rate, the advantage of exports has gradually decreased.
If the United States starts to cut interest rates and our country remains unchanged, the export advantage will decline. But what followed was the return of the renminbi exchange rate. We have avoided being harvested by the dollar tidal wave as little as possible, and at the same time reflected the stability of the yuan in the international market. From this perspective, it will naturally attract international capital to flow to the RMB. This has increased the activity of the renminbi in the international market. At the same time, it also represents an increase in the trading volume of the renminbi in the financial market.
At the same time, it is conducive to foreign trade settlement, and more countries use RMB for settlement. Promote the internationalization of the renminbi, further promote foreign investment into the domestic market, and stimulate economic development. The entry of hot money and the recovery of finance, this certainly bodes well. So what about those assets that will benefit China?
Under the trade-off, it will gradually be detrimental to exports, but higher interest rates will be conducive to the increase of imports. So we can import more raw materials from the perspective of global **. From the original processing-based enterprise structure, it has gradually shifted to a scientific and technological innovation-based enterprise structure. At present, China is urgently demanding industrial upgrading in terms of scientific and technological innovation, whether it is chips or 5G, as well as the cultivation of scientific and technological talents. After all, it is difficult to solve the employment problem of batches of college students every year.
Therefore, I must be more optimistic about the domestic scientific and technological innovation sector, and the direction of new energy, the assets of industrial upgrading, and this is a new outlet for our international industrial upgrading. And with the internationalization of the RMB, for example, the activity of the financial market will also increase, and the corresponding possibility will also be beneficial.
At the same time, judging from the current world situation, the United States can basically be said to be the central bank of the global economy, and most countries implement markets with complete liberalization of capital. That means that once the Fed signals a normal change, other countries will do the same in order to avoid capital outflows. After all, we have just experienced this wave of US dollar interest rate hikes, and we have also felt the simultaneous interest rate hikes of other developed countries. However, our country has a regulated free market, and we have not only not raised interest rates but have become more accommodative in this wave.
In contrast, if the United States starts a new cycle of interest rate cuts, although other currencies in the exchange rate market will also receive the signal of the dollar**, so as to accept funds from the dollar market. It's just that from the performance of the entire market and the stabilizing role played by the RMB in this round of dollar tides, I am personally more optimistic that more funds will flow to the RMB. This is a challenge and opportunity for my economic development, and from my perception, it is a new stage of challenges and opportunities in 2024.
With the end of the epidemic, China's economy is indeed facing a downturn, and the transfer of industrial bases in developed countries has indeed had a great impact on our labor market and factories based on OEM. But this is a developing country, the development of core competitiveness will inevitably go through the stage, we can not always be the world's factory, in order to enter the economic level of developed countries, we must have their own core competitiveness, that is, scientific and technological innovation. The technological development in the fields of new energy track, chip track, high-speed rail, aviation, infrastructure and other fields does show such a leading role. I am looking forward to a new round of economic development in the country.