Citigroup expects that strong Chinese exports will be key to economic growth this year, with the USD/CNY exchange rate projected to be 6.8 in the next 6 to 12 months

Citigroup's research report indicates that China's trade performed strongly at the end of last year, with both imports and exports exceeding expectations. On an annual basis, exports grew by 5.5% to USD 3.8 trillion; the trade surplus reached USD 1.2 trillion, both setting new records in modern history.

Citigroup believes that China's strong exports further enhance the possibility of achieving a 5% GDP growth, which is likely to continue being a key driver of economic growth this year. Beijing will implement more voluntary export control measures to alleviate external pressures, including the recently announced reduction of export tax rebate rates for solar and battery products. A "controllable" appreciation of the RMB is also part of the related measures.

Citigroup expects the USD to RMB exchange rate to be around 6.8 in the next 6 to 12 months. Robust economic data and buoyant market sentiment have driven the stock market up, which may delay the reduction of interest rates/reserve requirement ratios; it is believed that a reduction in the Loan Prime Rate (LPR) may still occur in the first quarter of this year, but not next week