CICC Chief Strategist: It's time for the RMB to appreciate further to strengthen consumption power

According to foreign media reports, CICC's chief strategist Miao Yanliang stated that China should allow the renminbi to appreciate further, which would give consumers greater purchasing power and ease trade tensions.

He noted that the experiences of various Asian countries and China's own history indicate that a strong exchange rate can promote more balanced growth in domestic and foreign demand. A moderate appreciation of the renminbi would help lower the prices of imported goods, energy, and services, thereby effectively increasing the purchasing power of Chinese residents. On the other hand, the appreciation of the renminbi would reduce profits in export-oriented low value-added industries, driving capital and labor towards industries focused on the domestic market. At the same time, the appreciation of the renminbi would also reduce trade surpluses and lower the risk of global trade disputes.

He continued by stating that the current moment may be an opportunity to allow the renminbi to appreciate, as the US dollar may soon enter a period of long-term weakness. However, any government adjustments to the exchange rate should be gradual and cautious. Additionally, exchange rate adjustments must be supported by other policies to achieve economic rebalancing, which also requires coordination with monetary and fiscal policies, as well as reforms in social security and taxation systems