The Chinese yuan is rising on Tuesday, despite the release of data that is reflecting poorly on the national economy. But investors might be focusing more on the US governmentâs actions on Huawei and the arrest of CFO Meng Wenzhou, which might lead to Beijing retaliating by targeting American executives. Ultimately, the situation could threaten the 90-day trade truce agreed upon by President Donald Trump and President Xi Jinping.
According to the China Passenger Car Association (CPCA), automobile sales declined for the sixth straight month, putting pressure on automakers that have placed their bets on future growth in the worldâs second-largest economy. The report shows that retail sales of sport utility vehicles, saloons, and multipurpose vehicles fell 18% to 2.05 million units last month.
At this pace, Chinaâs auto market will record its first annual decrease in two decades.
In November, factory prices rose at their slowest pace since October 2016 as domestic demand continues to wane. The November Caixin/Markit Manufacturing Purchasing Managersâ Index (PMI) jumped just 0.1 to 50.2, and the sub-index for new export orders slipped to 47.7 last month, down from 48.8 in October.
This comes as GoPro announced that it would be shifting its US-bound camera production out of China by summer of next year. The company is still unsure where it will relocate its operations, but it does intend to stay in China for cameras destined to other nations.
CFO Brian McGee said in a statement:
Today’s geopolitical business environment requires agility, and we’re proactively addressing tariff concerns by moving most of our US-bound camera production out of China.
All of these are factors that are leading many experts to forecast that the yuan will breach 7.00 per USD within six month, says a new Reuters poll. The newswire survey found that 60% of FX strategists anticipate the currency to slide 1% against its American counterpart next year.
The USD/CNY currency pair tumbled 0.19% to 6.8995, from an opening of 6.9127, at 18:44 GMT on Tuesday. The EUR/CNY shed 0.52% to 7.8099, from an opening of 7.8497.
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