China's Yuan Strengthens as Economic Indicators Shift

China's yuan is projected to strengthen against the dollar, potentially breaking the 7.0-per-dollar mark next year. Analysts, including Guan Tao, a former senior official with China's foreign exchange regulator, attribute this expected movement to U.S.

Federal Reserve rate cuts and improved trade relations between the U.S. and China. Bank of America forecasts the yuan could strengthen to around 6.8 per dollar by 2026, bolstered by a stable daily fixing and capital inflows, with Huatai Securities also projecting a rise to 6.82 by the end of next year.

However, recent economic indicators reveal challenges, as China's retail sales growth has slowed for six consecutive months, registering only a 1.3% increase in November, falling short of expectations.

This slowdown highlights ongoing pressure for the Chinese government to implement more effective macroeconomic policies to stimulate growth and address insufficient domestic demand, as noted by Fu Linghui from the National Bureau of Statistics.