Yuan Policy Lever Transmission Simulator

Macro Policy Levers

FX Fixing Undervaluation Wedge 8.5% PBOC daily central parity deviation vs equilibrium NEER.

Export Tax Rebate & Subsidy Rate 12.0% Value-added tax (VAT) rebate & targeted energy/credit support.

Capital Control Tightness Index 0.85 Cross-border capital mobility friction (0=open, 1=closed).

Domestic Consumption / GDP 38.5% Structural household consumption absorption capacity.

Partner Retaliatory Tariff Rate 15.0% Foreign countervailing duties & Section 301 responses.

Transmission Results & Balance of Payments Aggressive Export Mercantilism via Dual Lever

Export Price Margin Gain +6.8% REER wedge + rebate

Current Account Surplus 4.2% Share of GDP

PBOC Monthly FX Pressure -$18.4B Intervention Outflow

Partner Import Penetration +2.1% Manufacturing Displacement

Macroeconomic Transmission Mechanism: By decoupling the yuan fixing from market balance-of-payments clears and maintaining capital restrictions (0.85), monetary authorities suppress foreign consumption import costs while domestic consumption (38.5% of GDP) fails to absorb domestic industrial capacity. The resulting trade surplus (4.2% of GDP) exerts persistent manufacturing displacement pressures across trade partners.