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MNI BRIEF: China Must Be Alert To Possible Weaker Yuan-Advisor

(MNI) London

A depreciation of the yuan is a major policy risk as China’s hefty trade surplus falls this year, a high-ranking advisor said in an article.

Last year’s trade surplus was boosted by effects of the pandemic, including on other suppliers, which should normalise this year, at the same time as a slowing economy and possible risk exposures also pressure the yuan, Chen Daofu, deputy director of the Institute of Finance at the Development Research Center of the State Council, wrote in Securities Times.

Slow growth in M1 indicates that PBOC efforts to boost credit are still contained by soft credit demand, sluggish expectation and by the time-lag of policy transmission, Chen noted.

The central bank should enhance coordination with other arms of policy, such as the Ministry of Finance and the National Development and Reform Commission, via providing an accommodative environment, Chen said. In addition, the PBOC should innovate to produce more targeted tools and incentives to assist tech, small business and green development, he said.

MNI London Bureau | +44 203-865-3829 | jason.webb@marketnews.com
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MNI London Bureau | +44 203-865-3829 | jason.webb@marketnews.com
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