One piece of news that went mostly unnoticed over the weekend was a statement from Li Daokui, a professor at Tsinghua university and an advisor to the People’s Bank of China, that the renminbi could afford to appreciate by around 3% to 5% each year.
"Based on historical experience, yuan appreciation of 3% to 5% is affordable for China," Li was reported as saying by Xinhua.
"The yuan should rise in a controllable and gradual way, so the country’s export companies will not go bankrupt," he said.
The renminbi has risen by 2.1% against the dollar since mid-June, although much of that rise has come in recent weeks.
Meanwhile, I heard Zhou Qiren, a member of the PBOC’s monetary policy committee, argue last week that the rise of the renminbi is a key part of China’s desire for its companies to "go out".
"If the exchange rate is not more flexible, it will be difficult to persuade Chinese companies to go abroad [and invest] outside China," he said.
And today, a slew of new manufacturing confidence surveys indicate that the rise in the renminbi has, to date, not had much impact on factories. The NBS purchasing managers’ index was up for the third consecutive month to 54.7, with any reading above 50 indicating growth, and a similar picture was painted by HSBC’s Markit survey. Breaking down the survey, there was an indication that new orders , in particular, were growing strongly.