The People's Bank of China has clarified that the renminbi operates under a managed floating exchange rate regime based on market supply and demand and adjusted with reference to a basket of currencies. It does not set a target exchange rate or seek to influence the currency’s long-term trend, and it rejected claims that China uses depreciation to gain a trade advantage. The central bank also argued that current account balances do not have a simple linear relationship with exchange rates and that estimates of the renminbi’s equilibrium value remain too uncertain to support claims of undervaluation. The central bank withdrew from routine foreign exchange intervention after 2017 but may use macroprudential tools, expectations management and, in extreme circumstances, direct intervention to prevent destructive short-term overshooting, particularly rapid depreciation. Since the 2005 exchange rate reform, the renminbi has appreciated 23% against the U.S. dollar to around CNY 6.7, while its nominal and real effective exchange rates have risen by more than 50% and 35%, respectively. It has appreciated about 9% against the dollar since 2025. From 2027, China will provide the International Monetary Fund with additional foreign exchange data. The People's Bank of China said the IMF’s External Balance Assessment is principally a tool for analyzing external imbalances, not a definitive model for calculating equilibrium exchange rates, and should not be interpreted as an official judgment on the renminbi’s nominal value. It attributed global imbalances to factors including international production patterns, the monetary system and domestic saving and investment gaps. Under the 15th Five-Year Plan, China will seek to expand domestic demand, improve the business environment and deepen external opening, while calling for deficit economies to strengthen fiscal discipline, savings and industrial competitiveness.

Original source