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China’s $1 Trillion Trade Boom Won’t Stop Yuan Slide, Macquarie Says

  • Weak sentiment means exporters not converting all fx proceeds
  • More easing to help stabilize business confidence and currency
The Yangshan Deepwater Port in Shanghai.

The Yangshan Deepwater Port in Shanghai.

Photographer: Qilai Shen/Bloomberg

China’s trade surplus is set to top a record $1 trillion this year, but that won’t be enough to prevent the yuan from sliding against the surging dollar as business confidence wanes, according Macquarie Group Ltd. 

While China’s goods surplus is on track to reach the highest ever in world history, exporters have been reluctant to convert their foreign exchange back into yuan given the plunge in business sentiment this year, Macquarie’s chief China economist Larry Hu wrote in a note.