Morgan Stanley's Xing Ziqiang: The core purpose of the U.S. "Genius Act" is to maintain the dominance of the U.S. dollar, with a long-term bearish outlook on the dollar

Morgan Stanley's Chief Economist for China, Xing Ziqiang, pointed out: "The 'CHIPS Act' launched by the United States essentially reflects America's desire to maintain the dominance of the dollar during the digitalization phase of payment infrastructure." Xing Ziqiang believes that in the short term, the stablecoin legislation may further strengthen the international status of the dollar, but this may instead expose the global payment system's excessive reliance on the dollar's single-point risk. Xing Ziqiang analyzed that the Federal Reserve has begun a rate-cutting cycle, expecting a cumulative rate cut of 125 basis points by the first half of next year, bringing the rate down to around 3%. Meanwhile, U.S. inflation may remain high due to labor shortages and rising import prices, leading to a rapid decline in real interest rates. Xing Ziqiang stated that he is long-term bearish on the dollar. "When U.S. real interest rates decline, the interest rate differential with other major economies will narrow, and may even fall below the rates of these economies. This could weaken global capital demand for the dollar and U.S. Treasuries, leading to a depreciation of the dollar and exacerbating volatility in the U.S. Treasury market," Xing Ziqiang explained