China denies currency manipulation, defends market-based yuan
The People's Bank of China published a statement on October 8, 2026, rejecting claims that it manipulates the RMB exchange rate for trade advantage. The central bank said market forces, not intervention, determine the currency's value under its managed floating regime.
Market forces, not Beijing, set the rate
The PBOC said China operates a managed floating exchange rate regime based on market supply and demand with reference to a basket of currencies, with market forces playing “a decisive role” in determining the exchange rate.
The central bank has phased out regular intervention in the foreign exchange market since 2017 and neither targets a specific rate level nor seeks to determine the currency's longer-term trajectory.
During shocks such as the pandemic and the 2025 tariff war, the PBOC used macroprudential tools, and in extreme cases market interventions, to counter self-reinforcing depreciation expectations.
China joined the IMF's Special Data Dissemination Standard in 2015 and will begin reporting foreign exchange operation data to the IMF in 2027.
23 percent stronger after two decades of two-way floats
The market-oriented reform of the RMB exchange rate regime dates to 1993, with further steps taken in 2003, 2005 and 2013.
Since the 2005 reform, the RMB has strengthened against the US dollar from 8.27 to around 6.7 per dollar, a cumulative gain of 23 percent, while its nominal effective exchange rate has risen over 50 percent and its real effective rate 35 percent.
Since 2010 the currency has gone through three appreciation-depreciation cycles, trading between 6.04 and 7.35 per dollar, and it has strengthened about 9 percent against the dollar since 2025.
A rebuttal with a blind spot
PBOC's pointed rebuttal reveals how exposed Beijing feels to manipulation accusations amid ongoing trade tensions.
The data cited — decades of two-way floating, SDDS compliance, a pledge to report to the IMF from 2027 — builds a reasonable case for market-driven pricing.
Yet the statement glosses over capital controls and offshore market structures that still shape how freely the RMB actually moves.
Source: PBOC’s View on the RMB Exchange Rate
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