China’s exporters shun the yuan, embrace alternatives as depreciation fears build
- With China’s yuan unable to keep pace with the US dollar, the country’s exporters are storing value elsewhere and only converting back what they need
- Currency volatility one of several factors impacting overseas business, as low profits create perilous situation for international operators
The recent volatility of the yuan, depressed profits and unexpected shifts in external demand are combining to make some Chinese exporters less sanguine about their business prospects – and more likely to park their assets in anything but the national currency.
“At the beginning of this year, it became clear that my circle of friends, all of whom are exporters, were short of US dollars,” said a Guangdong-based manager in the textile equipment industry. The manager, who elected to remain anonymous, has a nearly US$1 million investment in a US factory.
“Perhaps, on the one hand, it is because the economy and exports are not that good, and everyone is earning fewer dollars. On the other hand, companies like us that are developing markets overseas have also encountered difficulties.”