Long-term appreciation in the yuan could have a large negative impact on China’s economy even if there was no substantial effect on the country’s exports in the short-term, a former senior official at China’s foreign exchange regulator warned. One-way bets on a rising yuan could hit smaller exporters, causing them to leave the market and result in the loss of jobs for many people, Guan Tao, global chief economist at BOC International, wrote in an opinion piece for financial news outlet Yicai. “If there are no jobs, people will not have an income and there is no way to expand domestic demand ,” said Guan, who is the former head of the balance of payments department at the State Administration of Foreign Exchange. “It is hard to view appreciation of the yuan as an absolute benefit for the Chinese economy and even the stock market,” he said. Purchasing managers’ indices data shows the new exports orders index for smaller firms has been below 50 since November, representing a contraction. China’s yuan has gained about 12 per cent against the US dollar since May 2020, hitting its highest levels in more than three years. Chinese policymakers have recently warned market participants against making one-way bets on the yuan and the People’s Bank of China (PBOC) on May 31 raised the reserve requirement ratio on foreign exchange deposits for the first time in 14 years. PBOC Governor Yi Gang reiterated at a financial forum last week that the central bank would keep the yuan exchange rate basically stable, while vowing to further improve China’s exchange rate mechanism. The yuan’s recent strength has, however, prompted some discussion among academics about its possible benefits in offsetting the rise in global commodity prices.