Weaker Dollar Incoming? BRICS Nation China’s Yuan Could Be Massively Undervalued Versus USD: Report
China’s Yuan Undervalued Against US Dollar, New Data Suggests
New data indicates that China’s yuan may be significantly undervalued in comparison to the US dollar. According to experts such as Brad Setser, a senior fellow at the Council on Foreign Relations, and Goldman Sachs analyst Teresa Alves, the current value of the yuan against the dollar is lower than it should be. Setser estimates the undervaluation to be around 30%, while Alves suggests a range between 20% and 30%. They both believe that the yuan is poised to rise in value in the coming years, with Alves stating that an increase in the yuan’s value in 2026 is a strong possibility.
At present, one US dollar is equivalent to approximately seven yuan. However, Chinese officials are optimistic about the yuan’s future value, with some predicting that it could strengthen to four or five yuan per dollar. Liu Shijin, a prominent economic advisor to the Chinese government, highlighted the potential for the yuan to appreciate in value. In a speech given in November, Shijin drew parallels between China and past manufacturing nations like the US and the UK, whose currencies were once weak but eventually grew stronger. He emphasized the benefits of a stronger yuan for Chinese consumers, who would be able to purchase higher-quality international products at more affordable prices.
As China aims to become a stronger consumer nation, the potential appreciation of the yuan could play a significant role in achieving this goal. By allowing Chinese consumers to access a wider range of international goods at competitive prices, the yuan’s rise in value could benefit both the economy and consumers alike.
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