The RMB exchange rate is now much more affected by flows from the capital account than the current account
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Chinese leaders are pleased with the pace of economic recovery and are less eager to push stimulus policies.
China’s equity rally is driven by a combination of improving fundamentals, more inflows, and a sudden change in sentiment.
Beijing shifted its policy from building a “strong currency” to a more pragmatic approach.
Chinese banks have become less vulnerable than three years ago thanks to Beijing’s de-risking efforts since 2017.
Chinese economy continued its recovery in May as all activity indicators improved from April, although the pace was slower than expected. The People’s Bank of China (PBOC) did not think it was problematic as it kept policy rate unchanged for the second straight month.