Chinese Yuan: Structural export drivers outweigh CNY – Commerzbank

Commerzbank’s Michael Pfister examines whether the weaker CNY explains China’s rising export market share. Using bilateral real exchange rates across major partners, he finds no systematic link between CNY moves and market share gains, including in advanced sectors like electric cars. The study suggests structural factors dominate and warns European policymakers that CNY appreciation alone is unlikely to reverse Euro-area market share losses.

Real CNY moves and export share

"Between 2019 and 2025, the CNY depreciated in real terms against many other currencies, including the Mexican peso by 33%, the British pound by 30%, the US dollar by 24%, and the euro by 22%. However, it also appreciated against some currencies, most notably the Japanese yen, against which it appreciated by almost 20%."

"Across all categories, however, no systematic relationship can be identified. In other words, on average across HS6 categories, the trend is actually slightly in the opposite direction; that is, a stronger CNY is very slightly associated with an increase in market share, even if the result is insignificant. At first glance, it appears as though the CNY plays no role."

"Perhaps analyses should not focus quite so heavily on movements in the CNY, but pay closer attention to other factors when examining the strength of Chinese exports. This does not mean that the CNY is not undervalued, as there are good reasons for this. But our analysis shows that changes in the real exchange rate do not explain the recent shifts in market share."

"For European policymakers, this suggests that CNY appreciation alone would probably not reverse the loss of market share."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)