USD/CNY FACES UPWARD PRESSURE AMID RISING US-CHINA TRADE TENSIONS
USD/CNY FACES UPWARD PRESSURE AMID RISING US-CHINA TRADE TENSIONS
China's Q1 2025 Economic Performance Surpasses.
China's economy grew by 5.3% year-on-year in Q1 2025, exceeding the anticipated 4.8%.
This growth was driven by robust consumer stimulus measures and proactive export shipments ahead of anticipated U.S. tariff hikes .
Despite the strong Q1 performance, Credit Agricole warns that the outlook for subsequent quarters appears increasingly challenging.
Structural issues such as overcapacity in manufacturing and a sluggish real estate sector may hinder sustained growth .
The U.S. has threatened to impose significant tariffs on Chinese goods, including a proposed 60% tariff on Chinese imports.
This escalation in trade tensions has led to increased volatility in the yuan's value .
The offshore yuan (USD/CNH) has weakened past 7.28 per dollar, reflecting market concerns over potential U.S. tariffs and the broader trade conflict .
In response to currency volatility and trade uncertainties, Chinese companies are increasingly holding dollar earnings offshore, pricing contracts in yuan, and exploring new markets in Asia, Latin America, and Africa to mitigate risks .
