China Weighs Yuan Devaluation Amid Trade Tensions

China's leaders are considering allowing the yuan to weaken in response to potential U.S. trade tariffs under Donald Trump. The move aims to counteract Trump's trade measures by making Chinese exports cheaper. Financial analysts suggest this shift, although risky, could boost China's economy by targeting a 5% growth.

In anticipation of renewed trade tensions under a potential Donald Trump presidency, China's top leadership is contemplating a strategic devaluation of the yuan in 2025. This maneuver seeks to counter the impact of proposed punitive U.S. tariffs, making Chinese exports more competitive globally.

Sources close to the discussions disclose that this strategy marks a departure from China's longstanding policy of maintaining a stable exchange rate. By allowing the yuan to depreciate, China would aim to achieve its challenging economic targets, including a 5% growth rate, despite slowing exports and shrinking imports.

While financial analysts acknowledge currency devaluation as a viable policy tool, they caution against its aggressive use. Such actions could provoke retaliation from other nations, potentially exacerbating trade tensions. The evolving strategy underscores China's delicate balancing act in navigating complex international trade dynamics.

(With inputs from agencies.)