China is signalling it is ready to deploy the economic “nuclear option” and willingly devalue the yuan as Beijing ramped up the purchase of commodities in recent weeks.
The move has prompted analysts to suggest the People’s Republic of China (PRC) is preparing for “something major” in a desperate bid to attract buyers as its economy faces a rocky patch.
Steno Research Cep Andreas Steno Larsen said: “China is preparing for something major. That seems increasingly obvious judging from the stockpiling of important resources.
“Could it be that they are preparing a major one-off devaluation of the CNY?”
The devaluation of the Chinese yuan would indeed likely boost trade, resulting in cheaper goods and more competitiveness but would also cause a considerable economic upset on a global scale.
Devaluation would come with considerable short-term benefits for China but would also threaten to exacerbate its ongoing tensions with the US and other potential international partners at a time when Beijing is seeking to expand its presence across new global markets.
Craig Shapiro, a macro adviser at LaDucTrading, told Newsweek: “I don’t believe China is preparing to devalue its currency against the dollar.
“But I do believe that China continues to purchase commodity resources, which it can purchase in RMB (renminbi/yuan) from sanctioned producers like Russia and Iran.”
During his visit to China over the weekend, US Secretary of State Antony Blinken stressed that the US has serious and growing concerns with China’s policies and practices on the local, regional and global stages.
On several occasions, he slammed Chinese overproduction of electric vehicles that threatened to have detrimental effects on US and European automakers and complained that China was not doing enough to stop the production and export of synthetic opioid precursors.
Chinese officials were similarly direct, saying that while relations have generally improved since a low point last year over the shootdown of a Chinese surveillance balloon, they remained fraught.
Tyler Mitchell