Abstract: Against the backdrop of high interest rates in the United States, the depreciation of local currencies has put Asian central banks in a dilemma. If they want to maintain the exchange rate, central banks will have to follow suit and raise interest rates, but this may damage the newly recovered macroeconomy
Text: Kang Kai
Edited by Yuan Man
In the Japanese tourist city of Kyoto, locals now have to wait three or four times to get on the bus. Even when they got on the bus, they were competing for their seats not only with other passengers, but also with the suitcases of tourists.
This is an unexpected gift from the depreciation of the yen to the country's tourism industry: foreign tourists have surged and total spending has climbed.
According to data from Fliggy, a third-party platform, Japan was the second largest outbound destination for Chinese tourists during the May Day holiday. Some tourists said that the handbag that costs about 26,000 yuan in China is basically 18,000 yuan after being converted into yen plus tax refund in Japan, which is equivalent to a seven-fold discount. "Now it's about spending more. The more you save. ”
Year-to-date, the yen has depreciated 11% against the dollar from 140.88 to 158.33. For the renminbi, the yen has also fallen nearly 8% so far this year.
The depreciation of the local currency is not just a problem for Japan. Since the beginning of the year, compared with the dollar index, the yuan has fallen by 1.4%, the South Korean won by 5%, the Malaysian ringgit by 3%, and the Vietnamese dong by 4.5%.
In the foreign exchange market, actual demand and investment are the two major driving forces that affect the market trend. While Asian currencies have depreciated, the drivers behind them are different.
In Japan, interest rate differentials of nearly 400 basis points with the United States have attracted the attention of both local and international investors to the "carry trade". In China and South Korea, although the interest rate differential with the United States is still large, the increase in corporate imports, the increase in foreign investment, the arrival of the overseas dividend season and other real transactions are important factors driving the depreciation of the local currency.
Against the backdrop of high interest rates in the United States, the depreciation of the local currency has put Asian central banks in a dilemma. If they want to maintain the exchange rate, central banks will have to follow suit and raise interest rates, but this may damage the newly recovered macroeconomy.
As a result, Asian countries have embarked on two different paths. Some countries continue to sell dollars and buy their own currencies in the market to support the stability of their exchange rates; Others maintained a weak national currency.
This results in different countries. Support countries with stable currencies to maintain their balance of payments and lay the foundation for macroeconomic stabilization. Countries that choose to keep their currencies weak boost exports and attract foreign investment, but at the cost of rising imported inflation.
Japan is a representative of the latter. Even in the week when the yen fell below 155 against the dollar, Japanese policymakers intervened little verbally. Driven by the weak yen, the prices of McDonald's and Disney tickets and wages in Japan are significantly lower than those of other developed countries. As a result, not only did the total spending of visitors to Japan hit a new high in the first quarter, but the profits of Japan's manufacturing industry also rose, but Japanese households will bear additional energy and food costs.
Looking ahead, many market participants believe that the Federal Reserve will cut interest rates as early as September, which means that both Japan-US interest rate differentials and China-US interest rate differentials will widen, which will put some pressure on the exchange rates of Asian economies such as Japan and China. Goldman Sachs expects the yen to be around 155 against the dollar and the yuan to be in the range of 7.30-7.25 against the dollar in the next three to six months.
FUKUMOTO Tomoyuki, former director of the International Bureau of the Bank of Japan and a professor at Osaka Keizai University, said in an interview with Caijing: "For Japan, the overall pros and cons of the depreciation of the local currency are mixed, and the biggest benefit is to expand external demand and increase the profits of Japanese companies." Against the backdrop of Japan's labor shortage, this will help raise wages for employees, which in turn will boost the income of Japanese residents. But it is important to let wages outperform inflation and real wages to turn positive, so that a 'price-wage' spiral can be formed and Japan can get out of deflation in the long run." ”
Looking at Asia more broadly, Masamichi Adachi, chief Japan economist at UBS, argues that Asian economies will not experience competitive currency devaluations, let alone trade disputes. Because even if countries gradually converge in the new energy and chip industries, complementarity is still greater than competitiveness. "Maintaining broad trade and investment cooperation is the norm in the Asian economy." He told Caijing.
Spread carry promoter
"My dollar, your trouble." This famous quote that traders take to heart is once again resurfacing in the market. Strong U.S. economic data upended bets on a Fed rate cut. From Tokyo to Seoul, from Beijing to Hong Kong, the strong US dollar has made waves in the Asian currency market.
"Whenever the US economic data comes out, the currency market is extremely active. Buying the US dollar is still the number one trade. One trader told Caijing, "Everyone is waiting for the next wave, and the market is very wild." ”
This is especially true in Japan. Since 2024, the yen has depreciated 11% against the dollar to 158.33, the largest decline among G10 currencies. Even if the Bank of Japan exits its negative interest rate policy, it will not prevent the yen from continuing to depreciate. From March to May, the yen depreciated by 5% against the US dollar and crossed the 160 integer mark on April 29, the weakest since April 1990.
Import and export enterprises, residents, and institutional investors are important participants in the foreign exchange market. Some participants need foreign currencies for trade and investment for practical purposes. The other part is for investment, simply trading market fluctuations to make profits.
In Adachi's view, Japanese retail investors and international investors are the driving force behind this round of yen depreciation.
At the end of April 2024, the spread between the US and Japan 10 Treasury bonds was close to 400 basis points, the largest since November 2023. This has led the market to look at the "carry trade". This is a leveraged operation in which money is borrowed in a country with low interest rates and invested in another country where high returns can be obtained. In an environment where the Federal Reserve maintains high interest rates, the U.S. has been trading in the direction of the yen as a source of funding.
Young "Mr. Watanabe" – that's the name given to Japanese retail investors – these are the people behind the "carry trade". According to Nomura Securities, male investors in their 30s were the most active in the above transactions. "Watanabe" is one of the top five surnames commonly used in Japan and refers to retail investors in Japan.
"For the 'carry trade', financial institutions are also involved. After all, the interest rate gap between Japan and the United States is still very large, and no one wants to let go of this opportunity. Ding Rui, head of Japan research in the international group of the research department of CICC, told Caijing.
During the frenzy of the market, the line between speculation and investment becomes blurred. The power of shorting the yen prevails, amplifying the depreciation trend of the yen. According to data from the U.S. Commodity Futures Commission, as of April 23, the "non-commercial sector", which represents the buying and selling trend of speculators, was oversold by 179,919 yen, expanding for six consecutive weeks and hitting a new high since 2007.
In addition to the United States, investors are also looking for opportunities in emerging markets. The Mexican peso has continued to climb due to economic growth and monetary tightening expectations brought about by nearshoring, making it a favorite among Japanese investors. Bloomberg data shows that the JPY/MXN is highly volatile and the bid-ask spread is narrow.
The depreciation of the local currency is not just a problem for Japan. Since the beginning of the year, compared to the dollar index, the yuan has fallen by 1.4%, the South Korean won by 5%, the Malaysian ringgit by 3% and the Vietnamese dong by 4.5%.
Regionally, the renminbi has appreciated relative to a number of Asian currencies. The China Foreign Exchange System Renminbi Exchange Rate Index, which measures the renminbi's performance against 24 currencies, including the Japanese yen and South Korean won, has climbed 2.7% since 2023.
Unlike Japan, the real demand market is the main force that puts pressure on the RMB exchange rate, and the main driving force behind this is the purchase of foreign exchange by companies with dividends and commodity imports.
According to Bloomberg's statistics on the dividend payout plans announced by Chinese-funded Hong Kong-listed companies, as of April 27, the overall planned dividend payout in 2024 will be equivalent to more than US$80 billion, and the dividend payout time will be mainly concentrated in June-August. In addition to its own foreign exchange funds, enterprises may partially meet the demand for dividend payment funds by purchasing foreign exchange.
According to data from the General Administration of Customs of China, China's imports of other major commodities, except for soybeans and steel, increased significantly from January to April. Imports of refined oil and natural gas increased by more than 20% year-on-year. Commodities are generally denominated in US dollars, and increased imports will boost demand for US dollars.
But in the offshore market, speculative forces have also amplified the pressure on the renminbi to depreciate. At the end of March, the spread between the onshore and offshore renminbi widened to more than 200 pips, up from 150 pips at the beginning of the year. As offshore RMB liquidity tightened, the spread between the two gradually narrowed. The wider the spread between the onshore and offshore RMB, the more power there is to short the offshore RMB.
"Driven by interest rate differentials between China and the United States, Chinese importers and exporters are increasing their RMB liabilities and US dollar assets, and financial institutions such as hedge funds are also using tools such as cross-currency swaps (CCS) to long the US dollar and short the RMB. It's all a carry trade. Xing Zhaopeng, senior China strategist at ANZ Bank, told Caijing, "RMB shorts are mostly in the offshore market. After all, in the onshore market, the reserve ratio for forward foreign exchange sales is 20%, and the cost of shorting is too high. ”
The won is also quite similar to the yuan. South Korea's monetary policy is nowhere near as loose as Japan's. The main reason for the weakening of the won is that the country's current account surplus was offset by the country's National Pension Service's overseas investments, most of which remain unhedged.
Asia's central banks are in a dilemma
Asian currencies are so weak that the recent statement of the G7 expressed their agreement that disorderly fluctuations in exchange rates can adversely affect economic and financial stability. In recent weeks, policymakers from China, Japan and South Korea have emphasized currency stability.
In the process of depreciation of the yen, the yen exchange rate has strengthened sharply in a single day on several occasions. While Japan's top foreign exchange official declined to confirm whether the country had intervened, Bloomberg's analysis of the BOJ's account found that the BOJ may have spent $34.8 billion to support the yen on April 29. Japan's foreign exchange intervention is decided by the Ministry of Finance and implemented by the Bank of Japan.
Policymakers in Japan and South Korea have a variety of policy tools at their disposal to stabilize exchange rates, the most direct of which is to sell foreign exchange reserves. Japan and South Korea have foreign exchange reserves of 30% and 15% of their gross domestic product (GDP), respectively. At the same time, the government pension programs of the Japanese and South Korean economies also have considerable foreign exchange savings overseas.
Generally speaking, if Japan and South Korea intervene in the foreign exchange market, they can achieve the desired effect in the short term. The last time the two countries intervened in the currency market was in 2022. At that time, the Japanese Ministry of Finance sold US dollars, and the Bank of Korea sold foreign reserves, and the currencies of the two countries appreciated significantly after that.
Even if the intervention can effectively boost the exchange rate, Japanese policymakers are still hesitant in this round of yen depreciation. In a week when the yen fell below 155 against the dollar, Japanese officials intervened little verbally. At the talks between the United States, Japan and South Korea on exchange rates, Bank of Japan Governor Kazuo Ueda also gave little hint that any intervention was possible. Subsequently, the yen fell again against the dollar.
"The market is still worried about whether the Fed will cut interest rates this year, and this macro environment is not conducive to the intervention of the Japanese Ministry of Finance in the exchange rate. Because even if the yen is pulled up by intervention, it only gives everyone a better entry point to buy USD/JPY. That would make little sense to intervene. Ding Rui said.
Goldman Sachs believes that the BOJ's intervention is most successful when it is in line with macro fundamentals, when it is unexpected, and when Japan and the United States are in harmony.
Ding Rui said that the Bank of Japan may be happy to see a relatively weak yen that will not collapse. On the one hand, this will attract overseas tourists, and on the other hand, it will promote the deployment of foreign and domestic manufacturing in Japan, and bring their overseas profits back to Japan.
The failure of Japanese companies to return foreign exchange earned overseas to their home countries continues. In fiscal 2023, the country's profit from remaining overseas subsidiaries reached 10.57 trillion yen, about three times that of a decade ago. Foreign exchange stranded overseas will put downward pressure on the yen in the medium to long term.
In Tomoyuki Fukumoto's view, the depreciation of the yen is expected to boost Japan's domestic demand by expanding external demand. For tradable goods, Japanese companies generally do not lower the unit price of the US dollar due to the depreciation of the yen. Therefore, the effect of the depreciation of the yen to expand the volume of trade is limited. However, if the unit price of the US dollar remains unchanged, the depreciation of the yen will increase the unit price of products denominated in yen, and corporate profits will increase as a result. Against the backdrop of Japan's labor shortage, companies have the leeway and motivation to raise wages, which has led to an increase in household incomes, which in turn has pushed up prices.
According to a survey of 4,619 Japanese companies surveyed by Tokyo Shoko, 77.6% of large companies and 68.4% of small and medium-sized enterprises were understaffed as of the end of April. In March, Japan recorded the largest annual wage increase for workers in 33 years — 5.28 percent.
In contrast, Chinese policymakers are more determined to support the exchange rate. In April, Zhu Hexin, deputy governor of the People's Bank of China and director of the State Administration of Foreign Exchange, said: "The goal and determination of the People's Bank of China and the State Administration of Foreign Exchange to maintain the basic stability of the RMB exchange rate will not change. ”
In the onshore market, the People's Bank of China (PBOC) has increased US dollar liquidity by guiding major banks to sell US dollars. In the offshore market, China's central bank and the Ministry of Finance tightened RMB liquidity by issuing offshore central bills and treasury bonds. At present, the cost of funds to bet on a further decline in the CNH has risen sharply, with the one-year implied interest rate cost of the CNH reaching 2.6% and only 1.1% onshore.
"Supporting the RMB exchange rate, on the one hand, will help promote the outward direct investment of Chinese enterprises, because at this time, the purchasing power of Chinese enterprises will be enhanced, and it will be easier to carry out mergers and acquisitions, open companies and build factories abroad." "On the other hand, in the context of a large trade surplus, expanding foreign direct investment can also promote the internationalization of the renminbi," Xing said. The essence of OFDI is to borrow renminbi. As more and more Chinese enterprises go global, the financing attribute of RMB in the international arena will be enhanced. ”
Wang Ju, head of foreign exchange and interest rate strategy at BNP Paribas Greater China, told Caijing that China's current high savings rate, coupled with weak real estate investment, requires a large amount of capital to be deployed overseas. "This is an important window period, because the RMB interest rate is still low, which is conducive to China's production capacity and capital going out. If these companies can expand their overseas footprint and repatriate their profits to China, it will provide positive support for the RMB exchange rate. ”
According to data from China's Ministry of Commerce, from January to February, China's foreign foreign direct investment in non-financial products was 149.64 billion yuan, a year-on-year increase of 10%.
Exchange rate depreciation is a double-edged sword
As the yen depreciated to a new 34-year low, the positive effects are gradually being felt. In March, the number of inbound tourists to Japan reached about 3.08 million, an increase of nearly 70% year-on-year. Among them, South Korea, Taiwan, Chinese mainland, the United States and Hong Kong are among the top five. In the first quarter, the total tourism spending of visitors to Japan reached 1,750.5 billion yen, a record high in a single quarter.
Japan's manufacturing revenue and profits both increased. For Toyota, which derives most of its sales from overseas markets, its first-quarter operating profit rose 78% year-on-year. Another Japanese automaker, Honda, saw a six-fold year-on-year increase in operating profit over the same period, far exceeding analysts' expectations.
The share of overseas revenue from the Nikkei 225 index has increased to more than 50%. As a result of this, the Nikkei 225 has risen above its record high in 1989. Year-to-date, foreign investors have accumulated a net purchase of 5.5 trillion yen in Japanese stocks, the highest level since 2013.
In terms of foreign direct investment, semiconductor and data industries such as Microsoft, TSMC, Micron Technology, and Samsung Electronics are also increasing their presence in Japan.
However, exchange rate depreciation is a double-edged sword. This increases the cost of imported goods, affects the prices of groceries and factories, and thus increases the cost of living. At the same time, funds are more likely to flow out of countries with weak exchange rates in search of higher yields elsewhere, hurting domestic investment and economic growth.
Tomoyuki Fukumoto said that Japan's raw materials, energy and food are heavily dependent on imports, and their rising costs have become one of the most concerned issues for the Japanese people.
According to Mizuho Research & Technology, the average household spending burden in Japan may increase by an additional 106,000 yen in fiscal 2024 due to factors such as the weakening yen.
"If Japan's wage growth does not exceed inflation, the country's consumption will suffer, which will also affect Japan's economic recovery." Adachi said.
In the first quarter, private consumption, which accounts for more than half of Japan's GDP, fell by 0.7% quarter-on-quarter, marking the fourth consecutive quarter of negative growth. As a result, Japan's GDP fell by 0.5% quarter-on-quarter in the first quarter.
This problem is even more pronounced in South Korea. South Korea's ruling party lost its majority in the April parliamentary elections due to rising prices and other issues.
In Ding Rui's view, although the "carry trade" in Japan's exchange rate market is hot, it has not formed a large-scale capital outflow. "Under the current account, Japan has accumulated a large primary income surplus. Although not all of the profits from Japanese companies' OFDI have returned to China, their stay overseas has not led to a large outflow of capital. Under the capital account, foreign investors buy a large number of Japanese stocks, and this part of the funds will be hedged against the exchange rate, which will have a limited impact on the exchange rate. He said.
According to data from the Ministry of Finance, in fiscal 2023 as of the end of March, the current account surplus reflecting overseas transactions such as trade and investment was 20.6 trillion yen, up 92.5% year-on-year. The "primary income," which reflects the dividends and interest income received by Japanese companies from their foreign subsidiaries, set a new record.
"Although Japan is a country where capital moves freely, the Japanese people have a neutral exchange rate, which also alleviates the worries of capital flight in Japan. Since 2022, the yen has depreciated significantly, but the dollar deposits of Japanese residents have decreased significantly. For the Japanese people, the country remains their main destination for consumption and investment, and many Japanese people choose to reduce their US dollar deposits and switch to yen deposits. Ding Rui said.
As of the third quarter of 2023, Japanese households held more than $14 trillion in financial assets, more than half of which were cash and deposits.
For Asian economies, the depreciation of their currencies has the potential to be a trigger for trade frictions with their neighbours and may lead to competitive devaluations of national currencies. This is because the depreciation of the local currency will affect the competitiveness of countries' exports and the attractiveness of their countries to foreign investment.
The premise of trade disputes caused by currency depreciation is that the industrial structure of the economies of various countries is similar. According to the Export Similarity Index (ESI) released by the Korea International Trade Association in late April, the index has increased in the semiconductor, automotive, electrical, and electronics industries compared to five years ago. This means that the two countries are more competitive in their exports in the global market.
From Japan's point of view, Tomoyuki Fukumoto believes that the depreciation of the yen is essentially driven by the Fed's side, and the interest rate differential between Japan and the United States determines the trend of the yen. Even if the yen depreciated, the volume of Japan's foreign trade exports did not increase because the unit price of exported goods in US dollars was not adjusted. This means that Asian countries will not have trade disputes as a result.
Looking at the trade index (100 in 2020), the volume index of Japan's exports to the world fell by 3.9% in 2023, when the yen was also weak.
Adachi said that although the industrial development of Asian economies is becoming more similar, complementarity still outweighs competition. There are extensive intra-Asian trade and capital flows, as well as close cooperation along the value chain of a number of key industries. In addition, Japan's exports of automobiles and electronics are dominated by high-value-added products, and overseas users are more sensitive to product quality than price.
According to a McKinsey report, in 2021, nearly 60% of Asia's trade volume came from within the region, second only to the European Union. From 2016 to 2021, intra-Asian trade grew at a compound annual growth rate of more than 10%, about twice that of foreign trade.
The report also said that more than 90% of the world's nickel ore trade flows to Asia in the key value chain of new energy and semiconductors, and nickel is a key metal for new energy batteries. Of the world's 40 largest chip trade corridors, 33 are located within Asia.
A strong dollar pulls the trend
In Japan, Adachi believes that the yen may fall to 160 against the dollar by the end of 2024 and rise to 140 by the end of 2025 against the backdrop of the widening interest rate differential between Japan and the United States. According to RBC Capital Markets, the most accurate forecaster of the yen in the first quarter, the yen could fall to 165 against the dollar. Goldman Sachs believes that in the next three to six months, the yen may exchange at 155 against the dollar.
On the Chinese side, Xing Zhaopeng said that the interest rate differential between China and the United States is also very large, which will bring some pressure to the RMB exchange rate. In addition, seasonal factors such as dividends paid by Chinese enterprises in Hong Kong and the approaching summer cross-border travel season are also driving the short-term pressure on the RMB. However, factors such as the recovery of China's consumption will support the RMB in fundamentals. Goldman Sachs believes that in the next three to six months, the RMB exchange rate against the US dollar may be 7.30-7.25.
The direction of the Fed's monetary policy will affect the level of U.S. interest rates. Driven by the dual goals, inflation and employment data will point the way for the Fed's monetary policy.
On May 15, data from the U.S. Department of Labor showed that the U.S. core consumer price index (CPI) fell year-on-year, opening the door for the Federal Reserve to cut interest rates again this year. Excluding food and energy, the US core CPI growth rate fell to 0.3% month-on-month in April, the first decline in six months. In the same month, the US CPI rose 3.4% year-on-year and 0.3% month-on-month.
In April, the number of new jobs in the country's non-agricultural sector fell to 8.488 million, according to the U.S. Department of Labor, but this is still higher than before the Fed cut interest rates in 2019. This means that the U.S. job market is cooling, but not weak.
The CME Fed Watch forecast on May 16 showed that 97.1% of market participants do not expect the Fed to cut rates in June, and nearly half expect a 25 basis point rate cut in September.
In terms of the US dollar, UBS believes that if the Fed waits until September to cut interest rates, it is expected that the US dollar will remain well supported in the coming months, and its strength may continue into the third quarter. As of May 16, the U.S. dollar index was trading at 104.37, up nearly 3% for the year.
From the Japanese side, Adachi said that inflation and maintaining financial stability are the monetary policy objectives of the Bank of Japan. At the moment, the BoJ's interest rate setters are more concerned with achieving the inflation target than with monetary policy to prop up the yen. While there are signs of rising prices in Japan, the BOJ will need to wait a few months to see if it will continue, and it is expected to raise interest rates again as early as October.
Tomoyuki Fukumoto believes that Japan's inflation in recent years has been driven by the supply side first, that is, the supply chain disruption caused by the epidemic and the Russia-Ukraine conflict, coupled with the strengthening of the US dollar, has pushed up the cost of imports. Now, inflation expectations for domestic economic agents are slowly starting to rise. Whether this situation will continue in the future depends on changes in demand. The key is whether Japanese companies can seize the window of yen depreciation and push up Japan's real wages. If a virtuous cycle is achieved, Japan's inflation level may be around 2%.
He further said that in the context of the gradual depletion of excess savings, Japanese consumption has been somewhat weak recently. But sooner or later, Japan's real wages will turn positive, which is expected to boost consumption in the country. Coupled with the strengthening of exports driven by the depreciation of the yen, the Japanese economy is expected to stabilize. From 2024 to 2025, Japan's economy may still be higher than the potential economic growth rate, and the medium- and long-term potential growth rate may be around 1.0%-1.5%.
After the Bank of Japan unexpectedly reduced its bond purchases during its routine in May, investor bets that the Bank will raise interest rates by the end of July have risen. The overnight index swap suggests that the probability of a rate hike by the Bank of Japan by the end of July is about 70%, up from 50% previously. A market indicator suggests that traders expect the Bank of Japan to raise interest rates only once this year after raising interest rates in March.
Investors' inflation expectations in Japan have now risen to their highest level in 20 years. The breakeven inflation rate, which reflects this expectation, rose to 1.508%, the highest since 2004.
From China's perspective, in addition to short-term seasonal factors, China's interest rates and fundamentals are the key factors affecting the RMB exchange rate.
In Xing Zhaopeng's view, the issuance of special treasury bonds, the intensive supply period of local bonds, coupled with the weak financial data in April, the central bank of China's loose monetary policy such as the RRR cut is expected to be difficult to leave. "However, the depreciation of the exchange rate and the squeeze on banks' net interest margins will still constrain the PBOC's interest rate policy." He said.
In April, China's M2 (broad money) rose by 7.2% year-on-year, the slowest growth rate since statistics began. M1 (narrow money) fell by 1.4% year-on-year, marking the second negative growth since statistics began.
At the end of April, the Politburo of the CPC Central Committee proposed to flexibly use policy tools such as interest rates and reserve requirement ratios.
In terms of fundamentals, from the perspective of investment in real estate and other industries, CRIC data shows that in April, China's top 100 real estate companies achieved sales of 43 billion US dollars, a year-on-year decrease of 45%.
On May 17, the People's Bank of China said that it would cancel the lower limit of the interest rate policy for commercial personal housing loans for the first and second houses at the national level; Lowering the interest rate of personal housing provident fund loans; The minimum down payment ratio for both the first and second home loans has been reduced by 5 percentage points on the previous basis.
In terms of exports, Wang Ju reminded that at present, European and American countries are quite concerned about the import of new energy vehicles, batteries, photovoltaics and other industries, which may affect China's exports in these fields to a certain extent. At the same time, the U.S. presidential election is imminent, and if the "Trump 2.0" situation reappears, it will also affect China's foreign demand.
(This article was published in the May 20, 2024 issue of Caijing magazine; The author is a reporter from Caijing)