China's Foreign Exchange Reserves Rise in August
China’s foreign exchange reserves increased by $19.55 billion in August, reaching $3.438 trillion, according to data from the People's Bank of China. The rise occurred amid a weaker U.S. dollar and a growing trade surplus, raising concerns about yuan appreciation. Global policymakers are increasingly scrutinizing Beijing’s currency management due to fears that an undervalued yuan gives Chinese exports an unfair advantage in global markets. The G20 recently highlighted China's export-driven growth model as a concern for member countries except China itself. German Chancellor Friedrich Merz has called the yuan undervalued by about 30%, urging dialogue with Beijing over trade practices. However, economists suggest that rapid appreciation of the yuan could harm China’s economic competitiveness and slow exports. Goldman Sachs noted that moderate annual appreciation—around 3-5% against the dollar—could help ease international tensions without significantly affecting growth. Meanwhile, Morgan Stanley emphasized that a weaker yuan is partly due to weak domestic demand following the property sector collapse.
Topics: China foreign exchange reserves global trade tensions trade surplus yuan appreciation