- The yuan’s decline follows a period of appreciation that revealed weaknesses in the Chinese economy
- How Beijing decides to address these weaknesses will determine the yuan’s future course
- If authorities implement serious reforms, volatility could increase
- If they decide on business as usual, the yuan will continue its decline
The international community breathed a sigh of relief when China’s growth forecast came out in March. The Chinese authorities announced that gross domestic product would grow by 6.5 percent in 2016. That’s fairly good by Chinese standards, and a great performance by global standards – the World Bank sees worldwide GDP growth to reaching no more than 2.4 percent. But will the Chinese forecast hold up? There are plenty of reasons to question whether it will.