be alert to the spillover effects of tightening global financial conditions
with the normalization of the fed’s monetary policy，another round of global financial cycle has begun，and the following spillover effects must not be ignored. for china，as a pivotal international creditor but at the same time owes huge foreign debts，how to properly manage external assets and debt repayment risks should be paid more attention to.
the federal reserve – the u.s. central bank，or the fed - started to reduce bond purchases in november，thus taking the first step towards normalizing monetary policy. with this as a sign，another round of the global financial cycle has begun.
the environment in this round of global financial cycle is absolutely unique: first，after the outbreak of the covid-19 pandemic，in order to help people and support economic operations，countries have injected huge amounts of liquidity through monetary and fiscal policies，resulting in extremely loose financial conditions. as a result，the leverage ratio has skyrocketed and asset prices have soared. second，the global economy remains uncertain and highly differentiated. in the world economic outlook released in october，the imf lowered the growth rate of the global economy next year and predicted that by 2024，the total output of emerging markets and developing economies (excluding china) will still be 5.5% lower than their potential growth rate. third，various signs indicate that the covid-19 pandemic is still difficult to be effectively contained in the short term.
