AI Hardware Boom Drives Sixth Straight Quarterly Gain in Yuan to 2023 High
GS•China's onshore yuan is set for a sixth straight quarterly gain, reaching its strongest since 2023, as AI hardware exports of semiconductors and servers drive a new export wave. Imports of chips and semiconductor equipment now outpace exports, lowering input costs and feeding a near-record $1.2 trillion trade surplus.
1. Yuan Extends Quarterly Gains
China's tightly managed onshore yuan has risen for six consecutive quarters, reaching its strongest level since 2023, reversing a trend of policy interventions that previously aimed to cap currency appreciation.
2. AI Hardware Exports Propel Growth
Demand for semiconductors, servers and other AI hardware has accelerated export growth, allowing manufacturers to maintain margins despite the strengthening currency and reshaping China’s export structure away from low-cost goods.
3. Imports of Semiconductors Soar
Imports of chips and semiconductor equipment have surged, outpacing export growth for the first time since 2017, driven by a wave of AI-related investments that make foreign components more affordable.
4. Policy Embraces Currency Strength
Policymakers show limited urgency to curb yuan appreciation given the reduced sensitivity of high-value exports to exchange-rate swings and the benefits of cheaper imported inputs for domestic industries.
