The onshore yuan has to deal with US pressure. Analysts’ forecasts for the renminbi are grim and severe. According to Reuters, the protectionist policies of US President-elect Donald Trump threaten to cause a collapse in the yuan. Moreover, China’s authorities may push the national currency down next year.
Experts do not rule out that China’s monetary authorities might devalue the yuan in 2025 as part of the strategy to counter tariff hikes repeatedly mentioned by President-elect Trump.
The active discussion of this issue in China indicates that the country will require substantial economic stimulus measures. A key element of this strategy could be the devaluation of the yuan, which would make Chinese exports cheaper and help minimize the negative impact of tariffs. It is speculated that the People’s Bank of China (PBOC) might lower the national currency to 7.5 yuan per 1 US dollar.
According to analysts from the China Finance 40 Forum, Beijing should temporarily abandon its peg to the US dollar. Instead, experts recommend linking the yuan to a basket of non-dollar currencies, primarily the euro. This would provide the Chinese currency with greater flexibility during periods of trade tension.
However, the yuan’s protracted weakness could trigger a negative reaction from China’s trading partners. These countries may have no choice but to impose restrictions on Chinese imports in response, analysts warn.
