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Opinion
Daniel Moss

Yuan Retreat Shows China Can’t Crush a Market This Big

China’s ascent has reshaped capitalism and carved out a powerful place in the world. But when it comes to this $7 trillion market, the country is bound by powerful constraints that make it almost normal. 

Travelers at Shanghai’s most-prominent railway station ahead of the Golden Week holiday.

Travelers at Shanghai’s most-prominent railway station ahead of the Golden Week holiday.

Photographer: Qilai Shen/Bloomberg

There are limits to Chinese exceptionalism. The slide in the nation’s currency — and how authorities handle it — says a lot about the constraints that a global system has on individual countries. It also shows how a monetary world dominated by the dollar and the Federal Reserve determines choices at home for even the weightiest of Asian economies.  

In a couple of decades, China’s rapid growth has propelled the economy from being smaller than a middle-ranking European country’s to one widely predicted to soon surpass the US. A generation of western officials intoned that the most significant event of their lifetimes was China’s rise to stardom. That hasn’t translated into good options to stop the yuan’s present swoon. Weakness in the face of the rampaging greenback is an almost universal condition. There’s little sign that Beijing expects, let alone desires, a big rally against the dollar. The yuan skidded to a 14-year low last week. It fell about 6% in the third quarter, a slightly smaller retreat than the yen, the Thai baht and the dollars of Taiwan and Australia. (South Korea's won was Asia’s worst performer, tumbling around 9%.)