Current Account Surplus
$412 Bn
+8.2% vs Baseline
US-China Trade Gap
$380 Bn
Structural Imbalance
Export Subsidization Effect
-14.2%
Price Competitiveness Boost
Equilibrium Exchange Impact
6.12 USD
Undervalued by 18.1%
Monetary & Capital Feedback Loop Vector Network
Dynamic D3 Flow Model
Nageswaran & Srinivas Thesis: "Yuan as Active Driver"
● ACTIVE SCENARIO
PBOC currency intervention lowers the Yuan's exchange rate below market equilibrium. This price suppression artificially lowers export prices, generating a permanent domestic trade surplus and forcing foreign trade counterparties (e.g., US) to absorb massive net export surges financed by PBOC purchases of US Sovereign Treasuries.
Orthodox View: "Yuan as Passive Symptom"
CONVENTIONAL MODEL
Traditional models treat exchange rates as passive absorbers driven by domestic savings-investment differentials. Under this view, trade imbalances stem entirely from foreign deficit spending and low savings rates, with currency valuation serving merely as an adjustment metric rather than the primary generative driver.
Simulated Balance Summary Report