Does the Fed’s Interest Rate Cut Mean the US Has Lost and China Has Won?

Published in Oriental Daily
(Malaysia) on 12 October 2024
by Nick Foo (link to originallink to original)
Translated from by Matthew McKay. Edited by Patricia Simoni.

 

 

 

The United States Federal Reserve recently announced a rate cut, and many have taken this to mean the U.S. has lost the “financial war,” with some even proclaiming that “the U.S. has lost, and China has won.” But does this spell the end to the U.S.-China game? The reality is not quite so simple.

For one thing, we should not underestimate American strength. As the first superpower in history to hold sway over the military, political, financial and cultural spheres simultaneously, the United States’ dominion far exceeds that of the British Empire at its peak. “Hyperpower” rule such as this has almost reached its limits in modern civilization.

Just think: In the 45 years after World War II in 1946 to the collapse of the Soviet Union in 1991, the U.S. succeeded in neutralizing the Soviet Union to eventually become the world’s only superpower. Strictly speaking, the U.S.-China game only started 15 years ago.

The U.S.-China Game Is Far from Over

The U.S.-China game goes back to 2009, when it dawned on the U.S. that China’s rise would threaten its global dominance. It therefore put forward the “Pivot to Asia” strategy and implemented a series of political and economic inhibitory measures directed at China. In 2015, the U.S. resorted to financial means to stifle the Chinese stock market, but failed to do so; and in 2018, the Trump administration launched a trade war — followed by technological, biological and public opinion wars — in an attempt to shut China down completely. But even under such pressure, not only did China fail to fall, it actually made breakthroughs in key technologies such as semiconductor chips.

Can American Financial Tactics Still Prove Effective?

Facing defeat on the trade and technological fronts, the United States’ last resort is financial war. In March 2022, the Fed began raising interest rates, hoping to hit out at the Chinese economy and draw capital back to the U.S. Indeed, this move dealt China a significant blow and slowed its economic growth for a time. But with the onset of U.S. interest rate cuts, many people see America’s financial war as a failure.

But can we really say that the struggle between the U.S. and China is over? Clearly not. While hot money may flow back into the Chinese market after the Fed’s interest rate cuts, the U.S. is not going to sit idly by: We can expect that the U.S. will eliminate such funds by engineering a financial crisis, or that it will avail itself of other ways to prevent capital from entering China.

Where the threat of war is concerned, and stock market crashes aside, creating regional conflicts is another more extreme measure that the U.S. has at its disposal. War in East Asia would naturally stymie the flow of capital into China — and this is not alarmist talk: The U.S. has repeatedly used war to safeguard its interests around the world. While the possibility of a head-on military conflict between the U.S. and China is unlikely, who can guarantee that some other form of conflict won’t occur? After all, American history tells us that, when it comes to protecting its own interests, the U.S. knows almost no limits.

How Should Investors Respond?

Faced with such a complex international situation, investors must remain vigilant, as the U.S. may be unable to use financial means for now, but it will not readily give up its efforts to hamstring China. From trade wars to financial wars to potential regional conflicts, every step could impact the global markets. It will be particularly important for the ordinary investor to act with caution and pay close attention to international developments.

History shows us that it took more than 20 years for the dollar to dethrone the pound sterling as the world’s currency. The game between the U.S. and China could likewise be a long one in the making.

Although the markets seem to have heaved a sigh of relief at the U.S. interest rate cuts for the short term, the way ahead is still full of uncertainty. The second half of the U.S.-China game is only just beginning, and investors should not take it lightly.

The world will not know peace any time soon, so what we need to do is remain calm and assess the situation, so that we can protect our own wealth in this game of great powers.


邦你看市:Fed降息意味著“美国输了,中国赢了”?

发布于 2024年10月12日 14时08分
撰文:傅炆邦

最近,美联储(Fed)宣布降息,很多人认为这意味著美国的“金融战”已经失败了。有人甚至说,“美国输了,中国赢了。” 但这场中美博弈真的结束了吗?其实,事情并没有如此简单。

首先,美国的实力不容小觑。作为历史上第一个同时掌控军事、政治、金融和文化霸权的超级大国,美国的统治力远超巅峰时期的日不落帝国。这种超强的统治力在现代文明下几乎已达极限。

试想一下,从二战后的1946年到苏联解体的1991年,这45年间,美国成功压制了苏联,并最终成为世界唯一的超级大国。而中美博弈,严格说来,才开始了15年。

中美博弈远未结束

中美博弈的起点是 2009年,美国意识到中国的崛起会对其全球霸权构成威胁,因此提出了“重返亚太战略”,开始对中国进行一系列政治、经济上的打压。2015年,美国试图通过金融手段打压中国股市,但没有成功。2018年,特朗普政府又发起了贸易战,接著是科技战、生物战和舆论战,试图全面压制中国。然而,即使在这样的压力下,中国不仅没有倒下,还在晶片等关键技术上取得了突破。

美国的金融手段还能奏效吗?

面对贸易战和科技战的失利,美国最后一招就是金融战。2022年3月,美联储开始加息,想要通过拉高利率、吸引资本回流美国,从而打击中国经济。确实,这一招给中国带来了不小的冲击,经济增长一度放缓。但随著美国的降息进程开始,很多人认为美国的金融战也算是失败了。

但我们真的能认为中美之间的斗争已经结束了吗?显然不是。虽然美联储降息后,热钱可能会回流到中国市场,但美国绝不会坐视不理。可以预见,美国很可能会通过制造金融风暴来消灭这些资金,或者通过其他手段阻止资本进入中国。

战争的威胁,除了股市崩盘,美国还有一个更极端的手段——制造地区冲突。如果东亚爆发战争,资本自然不敢流入中国。这不是危言耸听,美国曾多次在世界各地通过战争来维护自己的利益。虽然中美正面军事冲突的可能性不大,但谁能保证不发生其他形式的冲突呢?毕竟,美国的历史告诉我们,它在保护自身利益时几乎没有底线。

投资者应如何应对?

面对这种复杂的国际局势,投资者必须保持警惕。美国的金融手段可能暂时失效,但它不会轻易放弃压制中国的努力。从贸易战到金融战,再到潜在的地区冲突,每一步都可能影响全球市场。对于普通投资者来说,谨慎行事、密切关注国际动态尤为重要。

从历史经验看,美元从英镑手中接过世界货币的地位用了20多年,中美之间的博弈也可能是一个漫长的过程。

尽管短期内美国的降息似乎让市场松了一口气,但未来的局势依然充满不确定性。中美博弈的下半场才刚刚开始,投资者千万不要掉以轻心。

世界不会那么快和平,而我们要做的是保持冷静、审时度势,才能在这场大国博弈中保护好自己的财富。
This post appeared on the front page as a direct link to the original article with the above link .

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