GT Voice: Claim China tried to infiltrate Fed shows senators’ arrogance
Published: Jul 27, 2022 10:28 PM
The US Federal Reserve in Washington, D.C., the US Photo: Xinhua

The US Federal Reserve in Washington, D.C., the US Photo: Xinhua

US Federal Reserve Chairman Jerome Powell strongly pushed back against a report released Tuesday by US Senate Republicans that alleged China tried to infiltrate the Fed by recruiting or influencing its employees and economists in an effort to gather inside information on the US economy.

The report reflects ideological bias of certain US lawmakers and exposes their arrogance and fear at the same time. On the one hand, it is arrogant by some US politicians to believe that the US is the world's most innovative country and China needs to spare no effort to detect or even steal information from the US. On the other hand, US politicians feel uneasy about China's economic growth and try to curb China's development. The claim that China is trying to infiltrate the Fed is just a farce created by US politicians' ambivalence toward China's rise.

Powell was quoted by media reports as saying that "we are confident that Federal Reserve staff understand their obligations and are committed to maintaining both the confidentiality of sensitive information and the integrity of our workforce." Powell's response makes the report released by US Senate Republicans seem absurd and ridiculous.

The report is full of Sinophobia, but this is not new. In recent years, politicians in Washington have accused China of infiltrating US universities, businesses, and government computer systems, but those accusations were eventually dismissed due to insufficient evidence. This is essentially a chilling reincarnation of McCarthyism. US politicians should focus on how to save the US economy, which is facing the risk of a hard landing.

As the world's two largest economies, China and the US have no choice but to make the relationship work and not mess it up, or the consequence for not just the two countries but the world as a whole would be dire. 

The US side should view China and China-US relations objectively, and avoid letting ideological bias, Cold War mentality, and zero-sum thinking hinder normal China-US economic and trade exchanges.

US Fed officials and researchers regularly communicate and meet with their counterparts around the world, and such moves are normal and in accordance with regulations. Some Western media acknowledge that the Fed has ties to central banks around the world, and within the Fed many researchers have experiences working in foreign central banks and universities. Many economists see the Fed's international appeal as one of its strengths in developing research talent, some media reports noted.

The report is entirely a reflection of the bizarre political climate in Washington. While many US politicians can arbitrarily concoct so-called bills and fabricate lies to undermine China-US relations, they will never be held accountable should their groundless accusations damage normal economic exchanges and cooperation between China and the US.

Currently, the US is facing mounting risks of surging inflation and a looming recession. The Fed's monetary policy has brought severe impacts to the global economy. Recently, US media reports said that facing an unprecedented complex situation, Powell and the Fed are still struggling to understand a crazy economy hit by the pandemic and global energy woes.

The US Fed is in urgent need to strengthen communication and policy coordination with other major economies, so as to minimize the spillover effect of the Fed's interest rate hikes on the global economy. At this juncture, communication with China, the world's second-largest economy that has ample room for monetary policy, should be of great significance to the Fed's decision-making.

Central bank officials and researchers in China and the US should instead strengthen exchanges and not be influenced by the Senate report and the zero-sum thinking. If the normal economic and financial cooperation and exchanges are disrupted by this absurd report concocted by politicians in Washington, it will have a very negative effect on the US economy, as well as the global economy.