China’s central bank set the yuan at the strongest rate since mid-2023, fixing it at RMB 6.9438 to the dollar, continuing a trend from April 2025 when it hit its lowest point since 2007 of 7.3498. However, comparing it against other currencies, it appears as though it is currently more that the dollar is weakening than that the yuan is strengthening in its own right.

It is significant, in that the yuan is a controlled currency, that Beijing is deciding to strengthen the yuan against the US dollar, the world’s main trading currency. A stronger yuan means a tougher time for Chinese exporters and somewhat cheaper imports, both of which have some impact on China’s record trade surplus with the rest of the world, a growing source of contention. 

The other advantage of a stronger yuan is that it improves its chances of being treated seriously as an international currency, in spite of the fact that it is controlled. The overall sense of the market is that Beijing is okay with the yuan continuing to strengthen in the months ahead.

The Shanghai Integrated Circuit Industry Investment Fund, backed by the municipal government, has expanded one of its three funds more than 11-fold, reports the South China Morning Post. The move aims to pump more capital into the city’s chip firms as part of China’s broader pursuit of tech self-reliance.

The third phase of the fund, also known as Shanghai IC Fund III, recently increased its registered capital by RMB 5.5 billion ($794 million) to RMB 6 billion, according to business registry database Aiqicha. It added two new equity investors, namely Shanghai State-owned Capital Investment Leading IC Private Equity Investment Fund, which is set to inject RMB 4.5 billion and Pudong Venture Capital, owned by the district government of Pudong, which is contributing RMB 500 million.

The Shanghai IC Fund has invested in more than 20 local chip companies, including wafer foundries Semiconductor Manufacturing International Corp (SMIC) and HLMC, which is a subsidiary of Hua Hong Group, as well as ACM Research Shanghai, a semiconductor cleaning tool manufacturer.

As global capital trickles back toward China, policymakers are using tougher enforcement and cooling measures to slow the market’s pace in order to strengthen its appeal in the long term, reports Reuters.

With fund managers now seeking to diversify away from dollar-heavy portfolios, Beijing’s calibrated approach could help reverse years of retreat when some investors even called the country “uninvestable”.

Broader cooling efforts include tightening margin financing rules, curbing high-frequency traders’ access to exchange data, and curtailing stock-picking “influencers.” Sovereign funds, meanwhile, have pared back equity holdings. “The art of the slow bull is in effect,” fund consultancy Z-Ben Advisors said. The market is entering a self-sustaining cycle as “dynamics suggest a growing level of confidence in market depth from regulators and investors alike.”

The People’s Bank of China is boosting the supply of money available to banks to ensure they can meet the surge in demand for cash during the Lunar New Year holidays, reports Bloomberg.

The central bank injected a total of RMB 600 billion ($86.4 billion) via 14-day repurchase agreements late last week, ending a two-month hiatus for such operations. Industrial Securities forecasts the PBOC to add as much as RMB 3.5 trillion of funds via similar tools before the holidays kick off on Sunday.

The injections would address a roughly RMB 3.2 trillion liquidity gap identified by Bloomberg calculations. Withdrawals related to holiday spending, heavy government bond issuance and surging corporate demand for the yuan are all expected to drain funds from the banking system.

Shanghai has pledged to step up policing its manufacturing sectors to curb prolonged payment cycles that affect thousands of supply-chain vendors, reports the South China Morning Post.

Gu Jun, deputy secretary general of the municipal government and director of the city’s development and reform commission, told a press conference that a task force had been set up to ensure money owed to vendors would be paid promptly.

Gu did not specify which companies would be targeted by the task force but said an information disclosure mechanism would be introduced to help supervise firms that fail to comply. Authorities could either force the companies to repay immediately or make their names public to safeguard the interests of small and medium-sized enterprises.