The exchange rate of Chinese yuan against the US dollar surged by 6.71 percent last year. The yuan strengthened by 663 basis points on Monday, and the offshore yuan rose above the 6.41 mark against the dollar. The last time the yuan traded at its highest level was in 2014, when it averaged 6.1428 against the dollar.
A stronger yuan means that all Chinese people's assets would rise in value with it, but it has little significance to ordinary people. Its practical advantage is that the price of imported goods would fall, and price of foreign services (such as studying abroad) would become cheaper. The bad news is that China's exports will become more difficult, our holding of US Treasury bonds will depreciate, and so on. To sum up, as a major currency, the appreciation of the Chinese yuan is a reflection of China's strong overall national strength, especially the prosperity of economy and the increase of trade surplus.
One of the most common approach used in the US during an economic crisis is quantitative easing, or printing money. The dollar is supposed to depreciate a lot, but US political and military strength has helped underpin the dollar's overall strength.
Over the years, we've repeatedly seen the US announce sanctions against a country, causing its currency to plummet in response. Today, the exchange rate of the yuan against the US dollar is higher than that before Trump presidency. There are many complicated reasons for this, which cannot be summed up simply. But the Trump administration's crackdown on China has failed to shake the general trend and pattern of China's development. China has made considerable progress in the past four years. This is the fundamental reason.
The perspective of yuan is just one of the indicators for us to understand the time during turbulent Sino-US relations. It does send a clear message about China's resilience, and there is plenty of other room for debate about the pros and cons of yuan's rising exchange rate, but that is another matter.
The author is editor-in-chief of the Global Times.