Alice Han

And it's fundamental to the fact that Chinese economy remains structurally very imbalanced.

You know, when you have a weak currency, it benefits the exporters, it benefits China's export-led growth model, but it does not benefit everyday households, everyday Chinese who are buying and choosing to use the CNY to purchase, say, foreign goods that are relatively then more expensive.

So it's baffling, I think, to a lot of Western observers why, as China wants to rebalance its economy, it remains still wedded to a low CNY model, because at the end of the day, it seems to be a disservice to the rebalancing efforts to support the household, to support domestic demand.

But my own take, and I want to get yours very quickly, James, is that

At the end of the day, as much as they talk about rebalancing, this whole economic model is still highly dependent on exports.

It's still highly dependent on the manufacturing sector.

And if anything, the five-year plan that we'll see unveiled fully in March seems to suggest that they want to double down on this manufacturing-led growth.

So I think even although they want to talk about more recently in domestic China, a stronger CNY, it's hard for me to see them let go of this weaker CNY policy.

But I looked at the data of China's currency devaluation since about 2021.

We've seen it go down 18%, whereas the other currencies like the dollar and the euro have risen since the end of 2021.

And more importantly than that, actually what we saw this year is

In spite of the fact that the currency has been relatively strong to the dollar, if you look at the trade weighted basket, and this is important, the CFETS and MEB index, that's China's currency relative to a basket of other trade related foreign currencies.

It's been going down since the beginning of this year.

It's been depreciating relative to the euro, to the GPY.

to a lot of these other trading currencies.

And this is excluding the US, where obviously we've seen this weak dollar story that's driven some degree of relative CNY strength this year.

But James, enough of my rambling about this.

What's your hot take on the CNY and why it matters?

Yeah, I'm somewhat skeptical that the voices that you mentioned will be the dominant ones in this debate.

As you know, James, for the better part of a decade, we've heard a lot of talk about China needing a stronger currency to promote the internationalization.