The concept that currency #depreciation is good for a country's economic growth is very outdated.It only works under trade channels, because weaker currency can help expand the competitiveness of exports.1/5
Capital accounts in many countries are becoming more open. We must consider the impact of financial channels, which could be just the opposite of trade channels, said Huang Yiping, CF40 Academic Committee Chairman.2/5 cf40.org.cn/uploads/201909…
The depreciation of a #currency could further lead to stronger expectation of depreciation, which may promote more capital outflows, and this actually is not conducive to economic growth. 3/5
In the second half of 2015, when RMB was depreciating, the net capital inflow was significantly reduced. The reason was that the willingness to keep Chinese yuan fell, and capital flew out of #China, which is harmful to economic growth.4/5
In China, the role of financial channels has far exceeded the trade channels.It is true for both China and the US. The Trump's weak dollar policy is not very promising, because the US dollar is far more dependent on capital market and the service industry.5/5
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