Part 6/11:
One might wonder why China isn’t simply allowing the yuan to weaken freely to boost exports—a logical move in a trade war context. The answer, according to experts, lies in confidence. A sharp depreciation could trigger capital flight and undermine global trust in China’s economy. Instead, China prefers a controlled, modest depreciation that supports its export ambitions while maintaining market stability. Bloomberg reports that the PBOC has aimed for balanced moves rather than sharp devaluations, using measures such as subsidies, tax rebates, and market diversification to sustain growth.