There is no urgency for China to maintain its favorable yield differential against the United States as capital outflow and currency stability is no longer the key concern for China at the moment, with U.S.-China trade war looming, a slightly weaker yuan may be in China's favor.

Tommy Xie

Categorized in : Business

We think China is unlikely to engineer 25% depreciation to counter the impact of tariff as the cost of capital outflows amid the shrinking current account surplus may outweigh the benefit of supporting export, the pressure on RMB depreciation may depend on three near-term factors including the size of China's retaliation package, U.S.'s plan to impose tariff on the remaining $325 billion products and market's assessment on whether the setback is temporary or not.

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There is no urgency for China to maintain its favourable yield differential against the United States as capital outflow and currency stability is no longer the key concern for China at the moment, with U.S.-China trade war looming, a slightly weaker yuan may be in China's favour.

business

I think the U.S. is asking for the impossible. Reducing the deficit by $200 billion by 2020 is quite an unrealistic demand, but it may also be a negotiation tactic to start high first.

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