Party Insiders Want Market Driven Yuan Depreciation

WSJ: A Rare Look Inside China’s Central Bank Shows Slackening Resolve to Revamp Yuan
Behind closed doors in March, some of China’s most prominent economists and bankers bluntly asked the People’s Bank of China to stop fighting the financial markets and let the value of the nation’s currency fall.

They got nowhere. “The primary task is to maintain stability,” said one central-bank official, according to previously undisclosed minutes of the meeting reviewed by The Wall Street Journal.

The meeting left little doubt China’s top leaders have lost interest in a major policy shift announced in a surprise move just nine months ago. In August 2015, the PBOC said it would make the yuan’s value more market-based, an important step in liberalizing the world’s second-largest economy.

...On Jan. 4, the central bank behind closed doors ditched the market-based mechanism, according to people close to the PBOC. The central bank hasn’t announced the reversal, but officials have essentially returned to the old way of adjusting the yuan’s daily value higher or lower based on whatever suits Beijing best.

...“The exchange-rate policy is being hijacked by state-owned enterprises, whose words carry a lot of weight with the leadership,” an official close to the state agency says. Companies with high dollar-debt exposure include China’s three national airlines and its largest shipping firm, China Cosco Holdings Co.
In the past few weeks, the strengthening dollar has renewed pressure to steady the yuan. The yuan is down 0.9% since the end of April, erasing the currency’s gain of 1% during the previous two months.

In late February, some central-bank officials expressed frustration they had to retreat from yuan liberalization because of pressure from the state sector. They were made during a meeting in Shanghai with economists, bankers and representatives from state-owned and private companies.
Now it's all on the capital controls, as anyone with inkling of what is coming will be moving as much money abroad as possible. Albeit more slowly, since the PBoC is literally buying them time.

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