An interest rate decision in the United States is causing a dilemma for Beijing.
The U.S. dollar index surged to a near 14-year high following the Fed's rate hike on Wednesday and its surprise forecast for three more hikes — instead of the two that were expected previously — to come in 2017.
Higher interest rates in the United States make it tempting for China to raise its own rates, because Beijing doesn't want more money to flee the country into higher-yielding U.S. bonds. That flight also hurts China's currency, the yuan. But Beijing could get its economy into trouble by raising rates, since its continued economic growth is very heavily driven by borrowing.
"You had this pressure that was already building, and the Fed has basically complicated and added to that with a more hawkish message," said Logan Wright, director, China markets research at Rhodium Group.