Thread by @ChinaFinance40

Some say #RMB exchange rate shouldn't be allowed to fluctuate freely. But Prof Yu Yongding says this has been proven wrong, and the best proof against it is the debate as to whether RMB exchange rate should be allowed to breach the critical level of 7 against #USD...1/6

This issue sparked controversy in the middle of last year. One view was that once the RMB exchange rate breaks the 7/USD threshold it will enter a freefall by as much as 20% or even 30%, which should not be allowed to happen...2/6

However, it was proven wrong. Facing the critical juncture, the #PBC remained calm and patient and did not intervene. It turned out that RMB did not end up in a crash as expected; instead, its exchange rate gradually stabilized...3/6

Prof Yu also reminds that discussions of exchange rate need to keep pace with the big adjustments in the country’s development strategies. The Chinese government has put forward the “#dualcirculation” strategy...4/6

Its core concept is that China’s economic growth should rely more on domestic market, which Prof Yu believes is correct. The government has released a signal that national development strategies may see big adjustments...5/6

But it doesn't mean that China will steer away from the general direction of reform and opening-up, but that the economy needs to be responsive to changes in the environment and development strategies need to keep updated. This is the necessary and correct thing to do. 6/6