At the 6.75 range, the USD/CNY has hit its lowest level so far in 2017, and our outlook is that it will keep falling. China’s export surplus balance is holding strong at +$42.4 billion, and its surplus to the USA grew $3 billion in June alone.
China has rebounded smartly since its 2015 ‘meltdown’, which saw stocks and currency values plunge. Imports are booming, climbing in June by 17.2% year on year, driven especially by commodities and iron ore that ends up in construction. Exports are also robust, rising 11.3% in annualized terms in June.
The economy has repowered from the slump, but it is different than was. Double-digit growth is now over. Service businesses are playing an ever stronger role alongside the ‘factory of the world’. And debt is increasing at a very strong pace.
By Yann Quelenn