According to recent data released, China’s GDP in 2023 was CN￥126.06 trillion (US$ 17.89 trillion) with a real increase of over 5.0% from the previous year. This year will also see growth, as China continues to have the world’s largest manufacturing economy and exporter of goods.
This means we can expect some signifiant movement in the global currency markets…
Asia Times reports…
A quiet yet profound shift in global financial dynamics may be on the horizon, one that could significantly alter the relationship between the Chinese yuan and US dollar.
A potential move by Chinese firms to repatriate their substantial holdings of dollar-denominated assets is central to this change, a scenario likely to occur as US interest rates are cut in the coming months.
This move could spark a wave of capital flows back to China, with far-reaching implications for the yuan, the dollar and global currency markets at large.
Estimates suggest that Chinese companies have amassed over US$2 trillion in offshore investments, a large portion of which is parked in US dollar assets.
Since the onset of the pandemic, Chinese firms have been seeking higher yields abroad, finding greater returns in dollar-denominated assets than in domestic, yuan-denominated options.
However, this trend may soon reverse. The US Federal Reserve is widely expected to cut interest rates in response to cooling inflation and economic challenges in the US.
