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BEIJING, 29 February 2025 – Chinese financial officials have expressed their determination to maintain the stability of the national currency amid the escalating trade war with the United States. Speaking at a press conference in Beijing, Governor of the People’s Bank of China (PBOC) Pang Gongsheng assured that the government will not allow sharp fluctuations in the yuan and will keep it at a stable and balanced level.
“We will resolutely prevent sharp jumps in the exchange rate and ensure that the RMB remains stable within reasonable limits,” said Pan Gongsheng during a briefing at the annual meeting of China’s top legislative and advisory bodies (the “two sessions”).
This was China’s first official response to US President Donald Trump’s accusations that China and Japan were manipulating their currencies to gain trade advantages.
Pressure on the yuan and new threats to China
The yuan has come under considerable pressure in recent months due to the strengthening of the US dollar and economic uncertainty caused by the Trump administration’s 20% increase in tariffs on Chinese goods.
Amid the escalating conflict, Washington has again publicly accused Beijing of currency manipulation – not the first such statement from Trump, who during his previous presidential term officially recognised China as a currency manipulator.
Pan Gongsheng stressed that Beijing will continue to adhere to a consistent exchange rate policy, leaving the market in the lead, while actively working to “manage expectations” to prevent panic among investors and businesses.
“The external environment remains challenging and tense. There is growing uncertainty about inflationary trends and monetary policy in the world’s leading economies,” the NBU Chairman said.
Will the yuan withstand the blow of a trade war?
China currently finds itself in a difficult situation, balancing the need to support exports through a competitive yuan exchange rate with the desire to avoid new accusations of currency manipulation. Analysts expect Beijing to focus on targeted interventions and containment policies to protect financial stability without taking drastic steps.
In response to the new US duties, the Chinese government may also take countermeasures by tightening trade restrictions on US goods or stimulating the domestic market.
However, the main challenge for Beijing remains to maintain the confidence of investors and partners in the international arena to avoid an even deeper fall in the national currency and an aggravation of the financial crisis in the context of global instability.
