China Rules Out Yuan Devaluation, Sets Growth Target
China's central bank governor Pan Gongsheng has declared a yuan devaluation is not needed to boost exports, signaling confidence in the currency's stability. The statement coincides with the launch of China's 15th Five-Year Plan, which sets a pragmatic GDP growth target of 4.5%–5% and emphasizes attracting foreign investment over currency manipulation.
The lowered GDP target is China's most restrained since 1991, signaling a strategic shift from pure expansion to what Beijing terms "high-quality growth." This approach prioritizes structural reform and high-tech industries over historical drivers like construction and debt-fueled investment. To meet the long-term goal of doubling its economy by 2035, China requires an average annual growth of about 4.2%. The decision to hold the yuan steady is backed by a strong export performance that doesn't necessitate currency depreciation. In 2025, China's exports grew 6.1% to $3.77 trillion, resulting in a record trade surplus of nearly $1.2 trillion. This resilience came despite a 20% drop in exports to the U.S., which was offset by significant gains with ASEAN, EU, and African nations. A key driver of this export strength is a shift up the value chain. High-tech and green products have replaced traditional low-cost manufacturing as the primary growth engine. Top-performing export categories in 2025 included semiconductors (up 26.8%), ships (up 26.7%), and automobiles (up 21.4%). To attract foreign capital, Beijing is actively reducing market barriers. Officials are shortening the "Negative List" for foreign investment and have already removed all restrictions in the manufacturing sector. The new focus is on opening the service industry, including telecommunications and healthcare, to foreign participation. The 15th Five-Year Plan also emphasizes boosting domestic consumption as the main engine of economic growth. The strategy includes raising personal incomes and expanding the middle class to stimulate spending on high-quality goods and services. Policy advisers have suggested lifting household consumption from its current level of roughly 40% of GDP. Underpinning the economic strategy is a push for technological self-reliance, with the plan pushing for breakthroughs in core technologies like semiconductors and artificial intelligence. The plan also outlines a national security focus, preparing for potential external shocks by setting up strategic industrial backups in interior regions of the country.
