Goldman Sachs: Why Beijing May Favor Gradual RMB Appreciation

Goldman Sachs expects Chinese policymakers to favor a gradual 3–5% annual appreciation of the RMB against the US dollar over the coming years. This path balances Beijing's goals of manufacturing leadership, RMB internationalization, and market-value GDP catch-up without significantly hurting real trade-weighted export competitiveness.

Key Takeaways

• 1.Beijing is expected to favor a gradual nominal RMB appreciation of 3–5% per year against the US dollar as the policy balance that maintains export competitiveness while promoting RMB internationalization and closing the GDP gap with the US.
• 2.China's goods trade surplus has reached 6% of GDP and over 1% of global GDP, stoking foreign concerns about de-industrialization and raising tariff risks.
• 3.Because broad USD depreciation (~1%/year) and lower domestic inflation (at least 1pp below trading partners) are projected, a 3–5% USDCNY appreciation will result in only minimal appreciation of the real trade-weighted exchange rate.

Table of Contents

• Why Beijing may favor gradual RMB appreciation
• The China Economics Team
• Disclosure Appendix

Report data

Exhibit 4: For China to "catch up" to US market-value GDP in the coming few decades, CNY appreciation will likely be required

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