QE tapering may slow Chinese reforms

As the US Federal Reserve begins to taper quantitative easing (QE), China may have to slow down the opening of its capital account in order to protect the country’s financial stability, South China Morning Post reported. “With the rising uncertainty on emerging markets due to the coming QE tapering, the Chinese government will most likely put special emphasis on financial and economic stability,” said Bank of America-Merrill Lynch China economist Lu Ting. Lu expects Beijing to postpone the widening of the daily trading band of the yuan against the US dollar, keep the yuan’s exchange rate against the greenback stable and slow the pace of loosening capital controls.