electronic Global Trade Credit Platform/eGTCP's Blog: Top Economist: Yuan Will Not Devalue Sharply

As we all know, China is a big market for the global trading business and the rate of RMB(Renminbi) also become an influential topic for the whole world.

Recently, there are some comments that the yuan will depreciate greatly.

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Well, that's not true. What does the economist say?

PBOC (People's Bank of China) expert says sharp depreciation not on the cards

The yuan will not suffer a sharp depreciation in the coming one or two years and its internationalization remains an "irreversible trend", leading economist and former central bank advisor Li Daokui said on Tuesday.

Li said possible uncertainties caused in the United States by the Trump administration, in the worst case scenario, might cause large fluctuations in the US financial markets. These, he said, could push up the value of the dollar and cause a big-margin depreciation of the yuan against the greenback.

"But the possibility of that happening is slim," said Li Daokui, head of the Schwarzman College at Tsinghua University.

"The yuan, therefore, will not experience major fluctuations in the coming one or two years," Li added, unless there are significant political changes in the US, which would cause great repercussions in the nation's financial markets.

Li's views were echoed by those of Eswar Prasad, a professor of trade policy at Cornell University in the US.

"China is coming to a turning point of growth," Li said.

But the country's recent risk-control-oriented financial tightening, including stricter management of overseas investment by Chinese investors, has triggered market concerns that China may slow its financial opening-up and the pace of yuan internationalization may suffer setbacks.

Li shrugged off such concerns and said the effect of the recent financial policies on the yuan internationalization process was only temporary. Future cross-border trade and financial transactions and exchanges between China and the rest of the world meant that "yuan internationalization will be an irreversible trend", he said.

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