‘Resilient China is firewall in emerging currency crisis’

China is the last bulwark against a deep crisis in emerging economies going fully global, analysts say, although a prolonged trade war could sap Beijing’s defences, reports AFP from Paris.

Emerging countries—loosely defined as having fast growing but volatile economies—have seen their currencies battered in recent weeks, plunging their finances into turmoil, and raising fears of global contagion.

But China, the world’s second-biggest economy and itself categorized as an emerging market, doesn’t share a key downside of the worst-hit countries: their rampant current account deficits.

“The possibility of a currency crisis in China is unlikely,” said Guan Qingyou, chief economist at China’s Rushi Advanced Institute of Finance.

Current account deficits must be financed with foreign currencies, and as central banks across the world enter a cycle of tighter monetary conditions, especially the powerful US Federal Reserve, cheap money will become scarce.

 

Resilient China is firewall in emerging currency crisis

China is the last bulwark against a deep crisis in emerging economies going fully global, analysts say, although a prolonged trade war could sap Beijings defences, reports AFP from Paris. Emerging countriesloosely defined as having fast growing but volatile economieshave seen their currencies battered in recent weeks, plunging their finances into turmoil, and raising fears of global contagion. But China, the worlds second-biggest economy and itself categorized as an emerging market, doesnt share a key downside of the worst-hit countries: their rampant current account deficits. The possibility of a currency crisis in China is unlikely, said Guan Qingyou, chief economist at Chinas Rushi Advanced Institute of Finance. Current account deficits must be financed with foreign currencies, and as central banks across the world enter a cycle of tighter monetary conditions, especially the powerful US Federal Reserve, cheap money will become scarce.