The Chinese yuan has been gaining against the US dollar over the last weeks.
CNHUSD – Weekly Chart
CNHUSD trades at 0.1373 after a tough year, which has dropped from 0.1480.
The Chinese yuan could benefit from talks with the US. Still, the dollar is also losing ground as traders believe the Federal Reserve’s tightening cycle is over.
In the three months before September, China experienced a deficit of $11.8 billion in foreign direct investment, marking the first drop on record. This suggests that companies are moving profits out of the country. But the country’s economy has also been weaker than expected.
The president of the American Chamber of Commerce in China, Michael Hart, said that some companies also withdraw earnings from China as part of a long-term profit cycle.
“The withdrawal of profits does not necessarily indicate that companies are unhappy with China, but rather that their investments here have matured,” Hart said.
The revival of US-China relations could boost the Chinese yuan and repair recent damage to geopolitics. Days before the president and the Chinese leader meet, White House national security adviser Jake Sullivan said Joe Biden wants to re-establish military ties with China.
Biden will visit President Xi Jinping in person for the first time in a year this week at the Asia-Pacific Economic Cooperation summit in San Francisco. It will only be the second personal meeting between the two leaders.
“The president is determined to see the re-establishment of military-to-military ties because he believes it’s in the US national security interest,” Sullivan said.” “We need those lines of communication so there aren’t mistakes, miscalculations, or miscommunication.”
The Biden-Xi meeting will cover many global issues, such as Israel, Ukraine, North Korea, Taiwan, the Indo-Pacific, human rights, fentanyl production, and artificial intelligence.
Relations between the two countries soured after Biden ordered the shooting down in February of a suspected Chinese spy balloon over the US. Still, top US officials have since visited Beijing to rebuild communications.
