Revaluation of Renminbi Will Not Impact Chinese Trade

Global credit insurer Atradius says the revaluation of the Chinese renminbi should not threaten the country’s long-term economic performance, but the company says it will continue to monitor the situation to gauge whether the change impacts the wider regional and global economy. Dr Gaurav Ganguly, group economist for Atradius, says: “While we expect that such a revaluation will have an impact on Chinese export growth in the short term and that some Chinese firms may well see their margins squeezed as a result of fixed term contracts, we do not see the revaluation as a threat to China’s economic performance.” Atradius says the revaluation has the potential to impact on the Chinese and global economies in a number of ways, which the company will continue to monitor, including the impact on other Asian currencies and the knock-on effect on the corporate sector in these countries. In the short term, Atradius says it expects to see continued pressure on the renminbi arising from China’s large trade surplus and the presence of speculative inflows of capital. Although the People’s Bank of China should be able to successfully manage the current situation to maintain the economy’s new peg, Atradius believes there is still the possibility of further revaluations in the medium term.


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