Yuan Appreciation Pressure May Ease as Service Trade Deficit Resumes: Guan Tao

The yuan may face less pressure to gain should China's service trade deficit widens back to its normal pattern, Guan Tao, the global chief economist of BOC Securities, wrote in an analysis on Yicai.com. If domestic demand steadily recovers, imports may accelerate, bringing down current account surplus, Guan wrote. More imports will also increase transportation costs, further widening the usual deficit in transportation service, a trend evident in Q2, said Guan. There may be more outbound Chinese travellers as vaccinations enable some countries to reopen borders, while China's tougher pandemic controls deter inbound traffic, Guan wrote. This may result in more tourism spending overseas than incomes from inbound travers, said Guan.