China's yuan dilemma: too weak abroad and too strong at home
Zawya · Kevin Yao, Casey Hall and Ellen Zhang ·
Yuan gains squeeze already-thin Chinese exporters' margins
Chen Lifeng, who runs a Chinese company exporting dresses to Europe, says the yuan's recent strength has made his products too expensive and all but swallowed his profit margins.
"It has hurt our ability to take orders. We barely have any profit left," said Chen, the owner of Ningbo Tengsheng Garments in eastern Zhejiang province. "If it keeps rising, we won't be able to stay in business."
His concerns underscore a dilemma for Beijing. While European leaders and IMF officials argue the yuan remains undervalued and unfairly benefits exporters, Chinese policymakers worry that a rapid rise squeezes thin exporter margins, threatens jobs and weakens one of the few reliable drivers of economic growth as domestic demand remains soft.