Name: Is China's Yuan a Weak Currency?
Uploaded: 2025-05-21T03:02:03.000Z
Duration: 10 min 10 s
Description: Thousands of YouTube videos with English-Chinese subtitles! Now you can learn to understand native speakers, expand your vocabulary, and improve your pronunciation...

China's currency, known as the yuan, or renminbi, RMB, has emerged as one of the world's most important currencies.

Many seem to believe that the yuan may one day replace the US dollar as the world's reserve currency.

Relative clauses (Restrictive vs. nonrestrictive)

However, there's just one problem with the yuan, and it's the fact that it may be weak, which is known to lose value against the US dollar.

But what does a weak yuan actually mean, and why is it happening?

To understand this, let's judge how its value has changed over time.

For about a decade, from the mid-1990s to 2005, China pegged its currency tightly to the dollar at roughly 8.28 yuan per one USD.

This means the Chinese central bank fixed the exchange rate, and did not allow it to fluctuate much at all.

During the Asian financial crisis in the late 1990s, while many Asian currencies collapsed,

China notably held the yuan steady around that value, earning praise for not devaluing.

In practical terms, throughout the late 90s and early 2000s, one US dollar cost about 8.28 yuan, and this hardly budged – a very strong peg.

Facing international pressure, China loosened its peg in 2005.

On July 21st, 2005, China revalued the yuan by about 2%, and said it would manage it against a basket of currencies instead of just the dollar.

Over the next decade, the yuan was allowed to gradually rise – strengthen – in value.

From 2005 to 2015, the yuan gained about 35% against the dollar, moving from roughly 8.28 yuan per USD to around 6.5 yuan per USD by 2015.

In other words, the yuan became much stronger in that period.

Notably, before the 2008 global financial crisis, the yuan climbed steadily, reaching about 6.8 yuan by 2008.

Then was re-pegged around 6.83 yuan during 2008 to 2010, to help China's exporters weather the crisis.

After 2010, appreciation resumed, and by 2014, the yuan was around the 6.0 mark – its strongest levels in modern history.

China's economy was booming and running large trade surpluses.

And a stronger yuan reflected that to some extent.

In August 2015, China made a surprise move to let the market play a bigger role in the daily rate setting.

This caused a one-time devaluation of approximately 4% in a few days.

Following that, the yuan weakened further through 2015 to 2016, falling from about 6.2 to roughly 6.9 per USD by end of 2016.

In percentage terms, it was an approximately 8.8% drop in value over August 2015 to December 2016.

In 2017, conditions stabilised, and the yuan bounced back stronger – about plus 4.6% that year.

Since 2018, the trend turned downward again amid a trade war with the US and a cooling

From early 2018 to mid-2019, the yuan slid roughly 8%.

The yuan's value fell past 7 yuan per dollar, a level it hadn't breached since 2008.

This drop caught markets off guard because China's central bank usually tried to support – hold up – the yuan.

The US reacted strongly, officially labelling China a currency manipulator.

At its weakest in fall 2019, the rate was about 7.18 yuan per USD.

However, by late 2019 into early 2020, the yuan steadied around the 7.0 mark, especially as the two countries reached a Phase 1 trade deal and the US removed the manipulator label.

The Covid-19 pandemic and its aftermath saw big swings.

In early 2020, as the pandemic hit, the yuan briefly weakened above 7.1 yuan.

But soon after, massive US stimulus and interest rate cuts weakened the dollar, and China's quicker economic recovery in 2020-21 made the yuan strengthen significantly.

By early 2021, the yuan was as strong as about 6.36 yuan per USD – its firmest in several years, helped by China's export boom – and, perhaps, a bit of confidence as the yuan was included in the IMF's elite currency basket in 2016.

The US Federal Reserve began aggressively raising interest rates to fight high inflation, making the dollar stronger globally.

At the same time, China's economy slowed, due to strict Covid lockdowns and a property slump, and Chinese interest rates were cut.

Result, the yuan fell sharply in 2022, from around 6.3 at its peak to roughly 6.9 by year-end.

In percentage terms, the yuan lost approximately 8.5% against the dollar in 2022, its biggest one-year drop in decades.

Moving into 2023, China's economy reopened, and initially the yuan firmed to about 6.7.

But as the year went on, weak growth and the widening US-China rate gap pushed it down again.

By late 2023, the yuan crossed 7.3 per USD, marking its weakest point since the 2008 financial crisis.

In fact, at one stage in 2023, the onshore yuan, in mainland trading, hit about 7.35 yuan, the lowest level in 16 to 17 years, since December 2007.

As of early 2025, the yuan remains under pressure and trades in the mid-70s against the dollar.

In April 2025, amid renewed US-China trade tensions, the yuan slid to around 7.35 per

That level, the weakest in nearly two decades, prompted Chinese authorities to step in.

By May 2025, the rate has hovered near 7.2 to 7.3.

In other words, the yuan today is much weaker than its peak strength a decade ago – 6.0.

But it's also much stronger than it was in the 1990s – 8.3.

It's been a bumpy ride of ups and downs, with an overall U-shaped trend.

Strong gains from 2005 to 2013, then a partial reversal since 2015.

So yes, in the short term, the yuan has weakened in recent years, especially 2022 to 2023.

But in the long term, it's still stronger than it was 20-plus years ago.

Whether it's weak depends on your time frame.

When people say a currency is weak, they usually mean it has depreciated – lost value – compared to some baseline, often compared to another major currency or a past level.

In the yuan's case, headlines about yuan weakness generally refer to its value against the US dollar reaching multi-year lows.

Indeed, recently, the yuan has been at its weakest levels since the 2008 global financial crisis in terms of the USD exchange rate.

In late 2023 and early 2025, $1 bought around 7.3 plus yuan, which, as noted, was the lowest – weakest – point for the Chinese currency in roughly 16 to 17 years.

Against other currencies, the weakness often discussed is specifically against the US dollar, which has itself been very strong globally.

In 2022, the US dollar soared against almost every currency – euro, pound, yen, etc.

It fell versus the dollar, but so did many others.

If we look at the yuan against a basket of currencies – trade-weighted value – its moves might be less dramatic.

For instance, in some periods, the yuan's value against a broad basket didn't drop as much as it did against the surging dollar.

As an example, between 2013 and 2015, the yuan's nominal value versus USD fell approximately 4.6%, but its real effective exchange rate, a basket adjusted for inflation, actually rose approximately 12%.

This shows that terminology like weak can depend on what yardstick you use.

That said, the focus is usually USD because so much of global trade and finance is dollar denominated.

And against the dollar, the yuan is indeed at a low ebb in recent memory.

Chinese authorities themselves have noted the currency has struggled since 2022 amid economic pressures, and it has lost value – around 5% during 2023 alone, for example.

So yes, the yuan is weak at present relative to recent years.

Chinese and international media often mention phrases like the yuan slid to its weakest in x years when it breaches certain levels.

The perception of weakness is not just about the number 7 plus itself, but also the direction – the yuan has been trending downwards, not up, against the dollar.

But anyway, do let us know what you think.