The Hong Kong South China Morning Post published an article on June 25 entitled "how the hawkish Fed can help China control market risk", the author is Nicholas Spero, partner of lauresar consulting, UK. The excerpts are as follows：

In the eyes of policymakers in developing economies, the "shrinking panic" is still imminent. In May 2013, the Federal Reserve hinted that it was considering reducing the scale of its quantitative easing program, which triggered a disorderly sell-off and dealt a heavy blow to emerging markets, especially those countries heavily dependent on foreign capital inflows.

On the 16th, the Federal Reserve advanced the time it expected to start raising interest rates, which surprised financial markets and gave developing economies ample reasons to worry about the possibility of panic again.

The Fed had previously been optimistic about soaring inflation, but this time it said price pressures could have a more lasting impact, and it expected to start raising interest rates in 2023, one year ahead of its original forecast.

Given the significance of the Fed's hawkish tendencies, the market reaction has been relatively moderate. However, in a key area, the impact is huge. The dollar rebounded sharply. Since the outbreak of novel coronavirus pneumonia, the US dollar has been under severe pressure because of the Fed's position of super doves.

The dollar index, which measures the dollar's performance against a basket of major currencies, rose 2.1% last week, its best week in more than a year and one of the strongest in the past five years. In a report released on the 18th, JPMorgan Chase said: "the US Federal Reserve's position has unexpectedly turned to hawks this time... It has the potential to become a watershed in the US dollar bull market."

If so, and if the policy shift is as significant as some investors claim, emerging market assets are bound to be in trouble. However, the more hawkish fed, especially the stronger US dollar, may be good for China.

In the past few months, Beijing has been trying to maintain market stability. This is partly due to the surge of speculative foreign capital inflows. The driving force behind it is that China has recovered rapidly from COVID-19, China has a higher rate of return, and China's bond market is relatively stable.

At the end of last month, the RMB exchange rate against the US dollar hit a three-year high. This month, the RMB depreciated 1.5% against the US dollar, and the commodities index of the Peng Bo news agency fell 2.9% since the 10th.

As the Federal Reserve prepares to withdraw its stimulus plan, although many other emerging market countries are also facing pressure to raise interest rates and fear that capital outflows will destabilize, China has begun to tighten its policy and is more concerned about how to deal with the influx of foreign capital.

It is unclear whether the Fed's policy shift is as tough as it appears, raising doubts about the sustainability of the dollar's rebound.

In the past few days, a number of Fed policymakers, including Federal Reserve Chairman Jerome Powell, have played down the threat posed by soaring inflation, insisting that they will wait patiently for interest rate increases.

This not only gives the impression that the central bank is worried about the possibility of another panic, but also shows that there are growing differences within the fed over the timing and conditions for raising borrowing costs. The US Federal Reserve, which firmly adheres to the hawkish line, may alleviate the pressure on the Chinese market to a certain extent. A hesitant fed, however, will do no good to anyone.