The government newspaper China Daily today published a color composite of charts of currencies around the world relative to the dollar, with one-sentence epitomes of the economic hardships suffered in each as a result; “Fed Hikes Harm Global Economies” is its headline. It adds a pictogram of “How a stronger dollar can hurt other countries"; and then concludes: “Some of the blow can be cushioned by a stable U.S. economy. But when the dollar strengthens because America is on the brink of recession? That’s tough.” (https://www.chinadaily.com.cn/a/202208/19/WS62febfcaa310fd2b29e730ea.html )
The People’s Bank of China central bank has been making interest rate reductions, which have been portrayed in financial press as emergency moves, but are actually changes in several rates, and all small changes. The Bank’s 5-year rate, mainly a reference for mortgage rates, has been lowered by 0.15% to 4.3%; the 1-year rate, more relevant to business loans, by just 0.05% to 3.7%. Combined with other cuts in recent months, the average of interest rates has moved down by about 0.35%. The point of this has been the serious credit and debt problems in the residential mortgage sector, with homebuilding being delayed in many cities even after mortgage down payments were made. In addition, southern provinces’ industries now face power cuts due to high temperatures and serious drought around the Yangtze Basin. Last year’s flow into the giant (48 GW) Three Gorges Dam reservoir was well above average; this year, well below.
