"The spread between the spot yuan and the fixing has widened sharply. So what it means to me is that the PBOC is fixing dollar/yuan low, just to instill some sense of stability and strength. Meanwhile, I think locals and investors are pulling their money out of China to the extent that dollar/yuan spot is rising," the strategist told CNBC's "Squawk Box." The spread as of Tuesday was at its widest since August 2015, he said, adding in a note that "[f]urther widening of the spot-fixing spread could sour sentiment, regardless of a lower than expected dollar/yuan fixing."
Yuan set to weaken more amid US-China trade tensions, policy divergence
"While the PBOC reiterated its neutral stance, we think that the move is one step further toward more accommodative monetary policy, which is only fitting given softening growth and mounting trade tensions," Wei Yao, China economist at Societe Generale SA in Paris, wrote in a note. She expects further cuts in the reserve rate ratios, lower rates on liquidity instruments and a lower interest rate corridor in the second half of the year.
China to Unleash $108 Billion in Reserve Cut for Some Banks - Bloomberg
The U.S.-China Business Council, which represents American companies that do business in China, said the market is actually much larger than just $130 billion in goods exports that the Trump administration appears to be most focused on. U.S. companies also exported about $60 billion in services to China last year and $40 billion worth of goods to Hong Kong, much of which finds its way into China. On top of that, American companies with operations in China sell hundreds of billions of dollars worth of goods and services to their Chinese customers. When all that is combined, China is about a $550 billion market for American firms, said Erin Ennis, senior vice president at the U.S.-China Business Council.
How China could hit the U.S. where it hurts - POLITICO
U.S. companies are well aware that tariffs are only one way that China can retaliate, said Rufus Yerxa, a former U.S. trade official who now serves as president of the National Foreign Trade Council. At a meeting Tuesday with NFTC’s board of directors — which includes companies like Walmart, Coca-Cola and Facebook — there was “significant concern” from a number of members that Beijing might lash out by “making life miserable for U.S. companies operating in China,” he said. “What are the Chinese going to do when they retaliate? They’re going to say, we can easily take this U.S. company out here because we’ve got a Japanese company, or a Korean company, or a European company ready to come in and do the same kind of business here,” he said. “I think that’s a very credible scenario of how all of this plays out."