The Economist – China

Why the IMF’s Newest Report Finds that the Yuan Is Undervalued

The International Monetary Fund’s latest World Economic Outlook finds the Chinese yuan about 16 % below its equilibrium level. The IMF’s valuation combines a trade‑weighted basket of currencies with purchasing‑power‑parity calculations, reflecting China’s sizable trade surplus and capital‑control regime. It warns that a sudden correction could destabilise export‑driven growth and trigger spillovers into other emerging‑market currencies. The finding also heightens calls for Beijing to liberalise its exchange‑rate policy.