17 Nations' Harvest Impacts Yuan Exchange Rate?

"The Fed has once again unleashed its 'harvesting' move,and this time it's really ruthless!" This online jest encapsulates the recent drama in the financial markets.

Recently,the Federal Reserve has taken a series of strong measures that have not only destabilized the U.S.economy but also triggered a massive storm of capital flows in the global capital market,which is truly astonishing!

The Fed's heavy punch,and the global market falls in response.

If you are a small retail investor in the stock market,happily watching the numbers in your account slowly rise,suddenly,a piece of news comes crashing down like a bolt from the blue—the Fed announces no interest rate cuts,and even the possibility of further rate hikes!This is not just a few simple words; it is like a heavy punch,directly hitting the "soft spot" of the global economy.

As the September non-farm data is revealed,Fed Chairman Powell's casual remark,"Take your time,no rush," acts like a fuse,instantly igniting the raging flames of market panic.The dollar rises in response,and many currencies,including the Chinese yuan,depreciate,as if overnight,the global monetary system has been reshuffled.

The "sheep shearing" game under the dollar hegemony

Why can every move of the Fed cause such a big stir?Behind this,there is actually a hidden mystery of the dollar's position as the global financial hegemon,manipulating everything behind the scenes.When the dollar is strong,the world is weak,which has almost become an unwritten rule.The Fed skillfully balances the supply and demand of the dollar by adjusting interest rates,this "remote control," so that it can direct where global funds flow.Skillfully achieving its economic strategic goals.

The Fed is obviously staging a thrilling "robbing Peter to pay Paul" drama.The surge in Treasury yields not only raises the financing threshold for the U.S.government and businesses but also places an unprecedented burden on the Fed's own balance sheet.The Fed seems to have no intention of stopping,instead,it increases interest rates,attempting to use this magnetic force to attract global capital back to the United States,in a vain attempt to alleviate the urgent domestic debt burden and high inflation.

Global victims: 17 countries are "harvested," who is the most injured one?In this financial game,the heaviest sacrifices are undoubtedly the countries with weak economic foundations and meager foreign exchange reserves.From Japan in the East to the United Kingdom in Western Europe,and from South Korea in Asia to India in South Asia,none of these nations have been spared,all falling into the quagmire of currency devaluation and capital flight.According to authoritative data,the policy adjustments of the Federal Reserve have caused at least 17 countries' economies to suffer severe damage,with some countries deeply mired in debt from which they cannot extricate themselves.

Taking Argentina as a mirror,this South American country has long relied on external funding for its survival.The strong rise of the US dollar has undoubtedly added a heavy weight to its debt shackles,making the economy struggle to move forward.Such tragedies are continuously replayed globally,which is lamentable: under the wave of globalization,the survival path for small countries becomes increasingly difficult and narrow.

China's Role: The Transformation from "Harvested" to "Gold Magnet"

On the grand chessboard of global capital flows,China unexpectedly stands out as a winner in this feast of capital migration.As the United States' monetary policy tightens,global investors are looking for new safe havens,and China,with its vast market size,solid political foundation,and superior investment environment,has successfully attracted a large influx of foreign capital.

The latest data shows that in recent months,China's stock market and real estate market have both seen significant increases in foreign investment.This trend has not only revitalized the trading vitality of the Chinese market but also added a new engine of growth to the Chinese economy.Particularly noteworthy is that China is no longer just a passive recipient of "capital harvesting" but has turned the tables,actively attracting global capital and gradually establishing itself as a new core in the global capital flow map.

Why Can China Stand Out in the Global Capital Flow?

China is particularly conspicuous in the great wave of global capital flows,and it can stand out because there are many strong forces supporting it.The sustained and stable growth of the Chinese economy has outlined a stable return blueprint for investors.The Chinese government's significant achievements in promoting market-oriented reforms and optimizing the business environment have effectively reduced the barriers to entry and operating costs for foreign capital.Coupled with China's huge consumption potential and a complete industrial ecosystem,it has paved a broad development track for foreign capital.

Through the deepening of the "Belt and Road" initiative and the acceleration of the internationalization of the renminbi,China is gradually weaving a global economic network centered on itself.This not only expands China's international stage influence but also opens up new investment paths and opportunities for global capital.

Although China attracts foreign capital like a "gold magnet," this is not without risks.A large influx of foreign capital,while bringing money and technology,may also make market competition more intense and could cause asset prices to rise too high,forming bubbles.The global political and economic situation is undergoing significant changes,and China must be ready at any time to deal with the complex and unpredictable issues outside.

While attracting foreign capital,China needs to strengthen its regulatory system and build a solid dam against risks.Optimizing the foreign investment policy framework and improving the quality and efficiency of foreign capital utilization is an urgent task.Strengthening regulation of the financial industry and properly managing financial risks is also very important.In addition,deepening reform and opening up,accelerating economic transformation and upgrading,and enhancing independent innovation capabilities are key to strengthening the internal growth momentum and sustainability of the economy.In the grand play of the global redistribution of capital,China is undoubtedly a heavyweight player with a significant role.The transformation from being a "capital recipient" to a "capital gravity field" not only highlights the strong resilience and global appeal of China's economy but also paves the way for more diverse and broader opportunities for China's future development.

While actively leveraging the positive role of foreign investment,China must strengthen the construction of risk prediction and management mechanisms.On the journey of deepening reform and opening up,it is essential to continuously promote the optimization and upgrading of the economic structure and enhance independent innovation capabilities.China needs to actively participate in global economic governance to ensure the maintenance of global economic order and to vigorously defend its core interests and rights.