Comments by the Chinese central bank
- Has taken note of US comments on the yuan
- Hopes that both sides can communicate on the issue
- Yuan exchange rate is primarily decided by market supply and demand
- Yuan will not be used as a weapon in trade frictions
- Flexibility and market-driven movements of the yuan have increased
The comments they are referring to is of course the ones made by Trump overnight here. Aside from the above, the central bank's deputy governor reiterates that China's direction of deleveraging will not change and that the deleveraging campaign has already shown very good results as the macro leverage ratio has stabilised.
The thing about the deleveraging campaign is that China is approaching it through tightening credit and that eats into growth potential. Although economic growth is still relatively steady, they need to balance out domestic banks having enough credit to support the economy while also cracking down on risks in the financial system.
