Why China's yuan can be safe-haven currency – former bank official flags its ‘advantages'
The argument – presented before the US Treasury chief rejected the possibility last week of the yuan gaining reserve-currency status – has underscored the ongoing debate over Beijing's push to internationalise the yuan. And it comes at a time when confidence in the US dollar is being tested by mounting debt risks and an amplified protectionist push by US President Donald Trump.
'In terms of institutional credibility – the government and central bank's commitment to stability – as well as macro fundamentals such as low inflation, current account surplus and large foreign reserves, the yuan already enjoys considerable advantages,' Sheng Songcheng, former head of the central bank's statistics department, and Sun Dan, an economist and researcher with the CEIBS Lujiazui International Institute of Finance, wrote in a recent article.
In the latest issue of Hong Kong International Finance Review, the two authors contended that the yuan had shown reduced sensitivity to risk indicators during recent periods of global stress, including from the ongoing Russia-Ukraine war and amid shocks from US tariffs.
The yuan has already displayed a more 'stable and neutral' performance and partial safe-haven traits, they said in the June 30 edition.
Traditionally, the US dollar, Japanese yen and Swiss franc are regarded as safe-haven currencies.
Since Trump's announcement of sweeping 'reciprocal' tariffs on April 2, the Chinese currency has shown resilience, with the offshore yuan briefly weakening to around 7.4 per US dollar before rebounding to about the 7.2 level.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
South China Morning Post
an hour ago
- South China Morning Post
Why ‘uneasy alliance' between US tech titans and Maga may backfire in China rivalry
The 'uneasy alliance' between America's tech elite and Donald Trump 's populist right base could undermine the country's competitiveness against China in the long run by cutting off talent and global markets, according to analysts. They also pointed to growing ties between the tech sector and the defence industry – including a new initiative enlisting senior tech executives to the Army Reserve – saying the 'tech hawks' could step up threats against China. The political influence of tech leaders has expanded since Trump's return to the White House in January, and analysts say they could have a big impact on China strategy in the coming years – though the public fallout between Trump and billionaire Elon Musk highlights the fragility in the alliance. 01:15 Donald Trump derides Elon Musk's plan to set up new political party, calling it 'ridiculous' Donald Trump derides Elon Musk's plan to set up new political party, calling it 'ridiculous' Shi Bowei, a research fellow at the Zhejiang Party School, said the trend of US tech firms deepening cooperation with the defence sector was one to watch. 'Will tech leaders shift away from their traditional stance of avoiding excessive foreign entanglements and instead embrace a more assertive, interventionist posture – evolving into aggressive 'tech hawks' or even zealous advocates of militarism?' Shi wrote on Tuesday in American Studies, a journal published by the Chinese Academy of Social Sciences. He also said tensions between the tech elite and the Make America Great Again camp could ultimately undermine efforts by the tech right to reshape US politics. Shi said the positions, influence and political trajectory of America's 'pragmatic and opportunistic' tech elite would have a huge bearing on the outcome of US-China tech competition On China policy, he noted that most of Trump's tech backers were pushing for continued pressure to contain Chinese technological development and for further decoupling in hi-tech sectors.
South China Morning Post
2 hours ago
- South China Morning Post
Chinese lidar maker Hesai loses lawsuit against US government for blacklisting
The US District Court for the District of Columbia on Friday ruled that the US Defence Department's finding that Hesai contributes 'to the Chinese defence industrial base' is supported by substantial evidence reflecting lidar's military application, national security concerns around Chinese lidar makers and Hesai's cooperation with Chinese agencies. Hesai, whose lidar sensors help self-driving cars and driver-assistance systems gain a three-dimensional map of the road, was added to the list early last year, along with over a dozen other companies. Hesai makes lidar – for light-detection and ranging – sensors used in self-driving cars and driver-assistance systems. Photo: Handout The company challenged the designation and has said its has no connection 'to the Chinese military or any other military body', and its products are 'strictly for commercial and civilian use'. The court, however, ruled that an entity contributes 'to the Chinese defence industrial base' if it produces a technology that has substantial military application, even if the product has commercial uses and is not directly supplied or used by the Chinese military. The defence department and Hesai did not respond to requests for comment.
South China Morning Post
2 hours ago
- South China Morning Post
Chinese law firms in ‘pivotal moment' as they answer the call to go global
Chinese lawyers are making inroads into the global legal services market in response to growing demand from their compatriots abroad and a push from Beijing. Advertisement They say that as more Chinese companies expand their footprint overseas many prefer to get legal support from Chinese lawyers and have more trust in them, but winning over clients from elsewhere is a challenge at a time of rising geopolitical tensions. Beijing has been pressing for more legal professionals to offer their services abroad to protect Chinese assets as its mega trade and investment strategy the Belt and Road Initiative marches into a second decade. As of last year, Chinese law firms had established some 207 offices overseas – more than 35 per cent of them located in countries involved in the belt and road strategy , the Ministry of Justice said in April. That marked an increase of 70 per cent from 2018, when there were 122 Chinese legal offices abroad. 02:48 Chinese President Xi Jinping unveils 8-point vision for nation's Belt and Road Initiative at forum Chinese President Xi Jinping unveils 8-point vision for nation's Belt and Road Initiative at forum 'Lawyers play an important role in supporting Chinese companies in their global expansion and it's essential for us to stay attuned in these changing times and to respond proactively,' said Liu Zhiqiang, a lawyer and executive director of Yingke Law Firm's office in Budapest, Hungary.
