PBOC Reaffirms No Intent to Use Yuan Depreciation for Trade Edge
SingTao · 2 SOURCESabout 2 hours ago2 MIN
Summary
The People's Bank of China (PBOC) has reaffirmed its policy stance on the renminbi exchange rate, declaring that China has no need or intention to use currency depreciation as a means to gain trade competitive advantage. The central bank emphasized that China's trade development is rooted in the improved international competitiveness of its industries, not in exchange rate manipulation. This statement underscores China's commitment to its managed floating exchange rate system while responding to international criticism regarding the renminbi's valuation.
Key Points
- The PBOC explicitly stated that China has "never engaged in competitive currency devaluation" and has no need to depreciate the yuan to obtain trade advantages
- China implements a managed floating exchange rate system based on market supply and demand, with reference to a basket of currencies, allowing market forces to play a decisive role in exchange rate formation
- Since 2025, the renminbi has appreciated approximately 9 percent against the US dollar, with the upward trend continuing into 2026 despite a generally stronger US dollar and rising US Treasury yields globally
- The PBOC argued that global economic imbalances are related to the evolution of the international division of labor, inherent contradictions in the international monetary system, and some countries' long-term high fiscal deficits and consumption patterns, rather than exchange rate policies
- During China's 15th Five-Year Plan period, the country will focus on transforming its economic growth model, expanding domestic demand, improving the business environment, and deepening high-level opening up to promote more open, inclusive, and balanced global economic development
Why It Matters
This policy statement directly addresses criticisms from some trading partners who have attributed their own industrial competitiveness challenges to China's exchange rate policies. For Hong Kong, which operates a linked exchange rate system with the US dollar and serves as a major offshore renminbi trading center, the stability and direction of the mainland's exchange rate policy carries significant implications for regional trade competitiveness and financial market dynamics .
This policy statement directly addresses criticisms from some trading partners who have attributed their own industrial competitiveness challenges to China's exchange rate policies. For Hong Kong, which operates a linked exchange rate system with the US dollar and serves as a major offshore renminbi trading center, the stability and direction of the mainland's exchange rate policy carries significant implications for regional trade competitiveness and financial market dynamics .