Weak Yuan May Not Boost China’s Economy: PBOC Adviser

A weaker renminbi, or yuan won’t necessarily lift China’s sagging economic growth rates, contrary to market expectations, warned an advisor to the People’s Bank of China monetary policy committee.

“Looking at the impact on growth, we used to think it [a depreciating renminbi] could boost exports, but the story has become a lot more complicated,” said Huang Yiping on the sidelines of the Boao Forum for Asia on Wednesday.

Because the country imports many of the building blocks of its exports via a global supply chain network, a depreciating renminbi could have mixed consequences for exporters, said Huang, who is also an economics professor at Peking University.

At the same time, any effect on exports could also be delayed as a result of the J-curve effect, he added, referring to a situation where a country’s trade balance initially worsens following currency depreciation.

CNBC

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