Central Bank of China: China never engages in competitive currency devaluation

China News Service, Beijing, October 8 (Di Ziying, Wang Enbo) The People's Bank of China released the "Policy Position of the People's Bank of China on the RMB Exchange Rate" (hereinafter referred to as the "Position") on the 8th, clearly stating that China's trade development is rooted in the improvement of the international competitiveness of its industries. China has no need or intention to gain trade competitive advantages through exchange rate depreciation, and has never engaged in competitive currency depreciation.

The position points out that China is a responsible major country. In the past multiple rounds of high-intensity external shocks, it has never engaged in competitive currency depreciation, and has never followed the trend to promote RMB depreciation to promote exports. For example, during the 2008 international financial crisis, many countries' currencies depreciated sharply against the US dollar, but the RMB remained basically stable. In recent years, in the face of greater depreciation pressure, the People's Bank of China has adopted macro-prudential policy measures in a timely manner to prevent the RMB exchange rate from overshooting in the direction of depreciation.

Currently, some voices in the international community mistakenly believe that China continues to enhance its trade competitiveness by keeping its exchange rate low for a long time. Judging from the data, multiple rounds of RMB appreciation in the past did not affect China's trade development, and China's export share did not increase faster during the devaluation period. For example, the RMB depreciated by 7% against the US dollar in 2016 and by more than 8% in 2022. During the same period, China's export share in the world fell by 0.7 percentage points.

The People's Bank of China stated that China's trade development is rooted in the improvement of the industry's international competitiveness. Historically, the world's major trade surplus countries are basically countries with relatively strong industrial competitiveness. China's trade growth has benefited from China's reform and opening up over the past 40 years, its ultra-large market, complete industrial chain and infrastructure system, rich, high-quality, hard-working labor resources, and continuous R&D and innovation capabilities.

The position also pointed out that, except for China, the products of some economies meet international demand and their exports also grow rapidly, which is not driven by the depreciation of their local currencies.