Can China sustain RMB depreciation?

CHINA FINANCIAL - Report 28 Jun 2018 by Michael Pettis

Special points to highlight in this issue:
• Beijing must be seen as having the ability to respond effectively and powerfully to American threats of trade intervention. RMB depreciation is one of the few responses it has, which is probably why the RMB has dropped 4 percent against the US dollar in the past two weeks.
• But sustained depreciation in the RMB undermines Chinese rebalancing and increases financial sector risk, damaging the Chinese economy more than it can damage the US economy. This is why we are unlikely to see sustained depreciation in the RMB.

Now read on...

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