CNY rebounds on US-China trade talk hopes, strong data

The offshore yuan strengthened to approximately 7.29 per dollar on Wednesday, bouncing back after two consecutive sessions of losses. The rebound was fueled by renewed optimism around the potential revival of U.S.-China trade negotiations and a robust batch of economic data out of China that surprised to the upside.

CNY rebounds on US-China trade talk hopes, strong data

Markets were encouraged by signals from Beijing indicating a willingness to re-engage in trade talks, albeit with conditions. Chinese officials reportedly stressed the importance of mutual respect in future discussions, calling for more diplomatic rhetoric from Washington and the appointment of a consistent, high-level U.S. trade negotiator who has the clear backing of President Trump. These demands reflect China’s concerns about recent volatility in U.S. trade messaging and the need for more predictable and constructive dialogue going forward. The yuan’s rally was further underpinned by strong domestic economic indicators. China’s GDP expanded at a faster-than-expected pace in the first quarter of 2025, registering the strongest growth rate in 18 months. The quarterly performance was driven by a resurgence in manufacturing and solid domestic consumption, both of which beat analysts’ expectations and point to an economy showing signs of renewed momentum despite global trade tensions.

Industrial production surged

In March, industrial production surged at its fastest pace since June 2021, benefiting from rising global demand for electronics, electric vehicles, and industrial machinery. Meanwhile, retail sales posted their quickest expansion since December 2023, suggesting improved consumer sentiment amid stabilizing property markets and better job prospects. On the employment front, the urban jobless rate declined slightly in March, easing from the two-year high reached in February. This modest improvement in the labor market has provided an additional boost to investor confidence, reinforcing the narrative that China’s domestic economy may be strong enough to absorb external shocks—at least in the near term.

China may be turning a corner economically

Currency traders took these developments as a sign that China may be turning a corner economically, even as geopolitical headwinds persist. The yuan’s rebound also benefited from a weakening dollar, which came under pressure due to rising concerns over the impact of aggressive U.S. tariffs and the growing unpredictability of Washington’s trade policy. As investors monitor the trajectory of upcoming trade negotiations and additional economic data from both the U.S. and China, the yuan’s performance will likely remain a barometer of sentiment on both bilateral relations and global growth. For now, the currency’s uptick signals renewed confidence in China’s economic resilience and in the potential for de-escalation—however temporary—in the ongoing trade standoff.