Yuan’s Divergent Performance Sparks Trade Tensions as China Defies Fed Rate Cut Expectations
The Chinese yuan has reached a nine-year high against the U.S. dollar while simultaneously collapsing against European and Japanese currencies. This deliberate divergence—engineered by Beijing—has made Chinese exports dramatically cheaper outside America, fueling export surges to Europe, Africa, Latin America, and Southeast Asia. August customs data reveals U.S. imports of Chinese goods plummeted to less than 10% of total exports, down from 15% last year.
Meanwhile, the People's Bank of China refuses to mirror the Federal Reserve's anticipated 25-basis-point rate cut this week, despite a 94.2% market probability. The standoff preserves China's yield advantage as global investors rotate into emerging markets, with the CSI 300 Index already surging 43% since September 2024 on state-backed buying and retail capital flight from low-yield deposits.