In 2015, China’s took the world by surprise when it announced a devaluation of its currency, the Yuan by 3%. This move sent shockwaves throughout global financial markets and put China in a league of its own as an economic & political powerhouse. The reason for the devaluation was to boost exports and stimulate growth, but it also had the effect of making China’s currency more attractive to international investors.

The Devaluation of the Chinese Yuan was a Masterstroke of financial policy that has made China untouchable and industrious. By making their currency more attractive to investors, they were able to bring in more foreign investment which helped to stimulate their economy. In addition, the lower value of the Yuan made Chinese exports more competitive on the global market. This helped to boost growth and create jobs in China, which in turn made China’s economy even more robust. It also meant that foreign countries interests and Chinese interest are interwoven in investments in China.

The other benefit of the Devaluation of the Chinese Yuan was ensuring Chinese Consumers only afford local made goods due to the expensive exchange rates and devalued Yuan. This in itself resulted in spurring a thriving local industry for the Chinese market creating more chinese jobs, products and know-how.  This made China an independent industrial nation which eventually secured its Geopolitical positioning as a nation capable of taking its own political stances and positions.

The last benefit of Devaluation of the Chinese Yuan was attracting international customers looking for low cost manufacturers whose supply chains now depend on China and the Chinese industries. Once in business that meant locking those international overseas economies into the Chinese industry. Finally when that was accomplished this secured China’s position as being untouchable unless you want to harm your own supply chains, economy and jobs. 

The Devaluation of the Chinese Yuan was a risky move, but it has paid off handsomely for China. They are now the world’s second largest economy and are well on their way to becoming the largest. There is no doubt that China is a force to be reckoned with, and their currency devaluation is one of the main reasons why.

If you want to learn more about the Devaluation of the Chinese Yuan and how it has helped to make China an economic powerhouse you can listen to my brief answer when I was asked “How can the US close the Manufacturing Gap with China?” at the Global Manufacturing & Industrialization Summit held in Pittsburgh.

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