RPT - MNI INTERVIEW: China 2026 Export Growth To Support Yuan

China's exports should grow by 5.2% y/y in 2026, down from 2025’s pace but supporting the yuan near current levels following last year’s gains against the dollar and enabling GDP to expand by 4.9% so long as Middle Eastern energy supplies are restored before mid-year, the chief economist of a major Chinese bank told MNI.

Allen Ding, Chief Economist at China CITIC Bank International, revised up his estimate for 2026 exports following the release of first-quarter data, which despite a slowdown in March showed an overall 14.7% rise in shipments against a backdrop of a high base comparison and unchanged U.S. tariffs. The strong performance, following export growth of 5.5% in 2025, also came despite the yuan’s recent appreciation – pointing to China’s increasing competitiveness as it moves up the value chain, Ding said.

Ding estimated China’s economic growth at 4.9% in 2026, but this, together with his other forecasts, still assumes that the Strait of Hormuz becomes navigable by June. In this case, the Middle East conflict would provide a one-off impulse to global inflation, and he believes the Federal Reserve could even cut rates once in the second half of the year.

However, a continuation of disruption into the second half of 2026 would be a very different scenario, for which markets are not priced, Ding said. Global inflation risks would intensify as they did in 2021-2022, and global economic growth could fall below 3%, meaning that the outlook for China's exports and GDP growth would need to be reassessed. (See MNI: Energy Price Jump To Restrain, Not End PBOC Easing Bias)

His forecasts point to a median level of the yuan of 6.85 to the dollar during 2026, very near its present rate and significantly stronger than 2025’s median of 7.17. Demand for the yuan will be driven by foreign exchange settlement from exports, together with some safe haven flows generated by the conflict in the Persian Gulf, Ding said.

The People’s Bank of China, which operates a managed float for the yuan, will be little concerned by the currency’s current level, given that its recent strength has mainly resulted from export growth, said Ding, an expert in the topic. It would only intervene should market speculation excessively widen the spread between the onshore CNY and offshore CNH rates, or during high volatility driven by one-way speculation, he said.

YUAN INTERNATIONALISATION

International use of the yuan could receive a boost from the jump in global demand for new energy products in response to the Middle East energy shock, given China’s massive output of products from electric vehicles to wind turbines and photovoltaic cells, Ding said. (See MNI INTERVIEW: Mid-East Conflict Is Chance To Promote Yuan Use)

Key to sustained growth in the use of the yuan around the world will be the convenience and trustworthiness it offers for making transactions, including ease of settlement and of managing exchange rate risk, rather than just the currency’s strength, Ding said, adding that his baseline scenario is that the growth of Chinese exports will further facilitate the currency’s internationalisation.