Article 2nd half
Perhaps this suits China: countries like Kenya and Ethiopia might have more incentive to receive renminbi for their exports to China if they owe renminbi to Chinese lenders. But in the meantime, a strengthening CNY might deter more countries from wanting to be indebted in that currency.
In any case, there may be less to the renminbi’s recent strength than meets the eye. Although the currency has appreciated against the dollar, the trade-weighted renminbi has barely moved in recent months, largely because of the weakness of the Japanese yen.
And in inflation-adjusted terms, the renminbi remains very weak indeed. The real effective exchange rate is still around 15 per cent cheaper than it was in late 2021.
From that point of view, the renminbi could strengthen by a lot if China’s currency dilemmas didn’t get in the way. So, if China’s trading partners really want a meaningful appreciation of the renminbi, they will have to shout more loudly about it.
