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Goldman urges gradual yuan rise and fiscal boost to support China growth
Goldman economists said the yuan is about 20.0% undervalued and argued gradual appreciation could reduce external imbalance and protectionist pressures.
Goldman Sachs economists say China should allow the yuan to appreciate gradually and pair that with more fiscal spending to support domestic demand as the country tries to meet its economic growth targets. In a Wednesday research note cited by SCMP Economy, economists Kamakshya Trivedi and Hui Shan linked the call to data from the first half of 2026 showing a bifurcated economy, with weaker domestic demand alongside stronger exports.
They said a gradual exchange rate rise could help restore external balance and mitigate protectionist pressure from abroad. The note also estimated the yuan nominal exchange rate was about 20.0% undervalued.
The researchers pointed to export resilience despite headwinds, including the US-Israel war on Iran. They attributed that strength to the global technology cycle and continued demand for renewable energy products amid an energy shock, according to the report.