US rate hike has little effect on China

An interest rate hike this week by the US Federal Reserve will have little impact on China since the nation has adopted measures such as capital flow management that will minimize the effects, a former central bank policy adviser said on Thursday.

China does not need to follow suit by raising its interest rate, said Yu Yongding, former member of the monetary policy committee of the People's Bank of China. "China needs to keep its interest rates stable," said Yu, an economist of the Chinese Academy of Social Sciences. "China has been able to resort to capital flow management to absorb the effect of the US interest rate hike, and the hike has been priced in by the market."

The Fed's move, announced on Wednesday, failed to have any major effects on China's capital market, as shown in the performance of its stock market, interbank market and currency exchange market.