As the United States faces renewed concern over unsustainable debts and its deficit outlook, ignited by the “One Big Beautiful Bill Act” and new tariff threats from US President Donald Trump, China’s yuan is being hailed by analysts for its resiliency during the ongoing trade war, with some pointing to a “renaissance of the renminbi”.
Concerns over the sustainability of US debt levels intensified after the US House of Representatives last week passed a sweeping tax and spending bill, which is more than 1,000 pages and contains a range of tax cuts, spending reductions and increases, including a proposal raising the federal debt ceiling by US$4 trillion.
Dan Wang, China director of Eurasia Group, said “the declining appeal of dollar assets is real”.
By comparison, the yuan has been on a steady trajectory – gaining 1 per cent against the US dollar since April 2, when Trump announced his unprecedented “Liberation Day” tariffs. This resilience sharply contrasts with the roughly 13 per cent devaluation that the yuan saw during the onset of the trade war from 2018 to 2020.
