Yuan ob­ses­sives are miss­ing the point


The as­cent of the yuan this year has brought with it some of the usual hand­wring­ing about the im­pact on China’s ex­ports.

The anx­i­ety misses the point about mod­ern China, as does much of the po­lit­i­cal con­ver­sa­tion in Amer­ica. A peek at re­cent data from China is in­struc­tive. The re­ally im­por­tant num­bers weren’t a de­cline in ex­ports, but a jump in con­sumer sen­ti­ment and a rise in im­ports.

With con­sump­tion and ser­vices now ac­count­ing for more than half of Chi­nese gross do­mes­tic prod­uct, it mat­ters less and less what the yuan does (it is up about 7% ver­sus the dol­lar this year), ab­sent a dra­matic and abrupt shift that sug­gests a break­down in pol­icy or some­thing se­ri­ously amiss.

The re­bal­anc­ing within China’s econ­omy — long sought but rarely ac­knowl­edged since it ar­rived — also helps ex­plain why the coun­try has beaten growth fore­casts this year de­spite the in­ces­sant warn­ings of a heavy debt load.

I’ve writ­ten be­fore about the ag­gres­sive plans of Starbucks and what that says about the chang­ing face of China’s econ­omy. The coun­try’s con­sumers are in an up­beat mood. An in­dex of sen­ti­ment pub­lished by the Na­tional Bureau of Statis­tics shows con­fi­dence the strong­est since 1996.

Lest that fig­ure be crit­i­cised be­cause it is pub­lished by the gov­ern­ment, the in­ter­na­tional mar­ket re­search firm Nielsen came to broadly the same con­clu­sion. Its pri­vate con­sumer con­fi­dence in­dex climbed to its high­est since at least 2009. Will­ing­ness to spend hit a new high while read­ings on em­ploy­ment and per­sonal fi­nances also ad­vanced.

Not that ex­ports are in­signif­i­cant. And Chi­nese au­thor­i­ties are not about let the yuan go where it pleases just be­cause young pro­fes­sion­als in Shang­hai want an ex­tra shot with their latte. But it’s not your grand­fa­ther’s China any­more. That tex­tile plant that left North Carolina in the 1990s may not even be in China any­more. It may have moved some­where cheaper long ago.

The yuan’s ad­vance re­flects at least partly the un­ex­pected strength of the econ­omy this year, a de­cline in the dol­lar, and au­thor­i­ties’ rel­a­tive com­fort with the cur­rency’s move­ment for most of the year.

While Bei­jing fig­ures out where it wants the yuan to be, the task has a bit less ur­gency thanks to the trans­for­ma­tion of the econ­omy. Now in­vestors need bet­ter data on the new en­gine of the Chi­nese econ­omy — so they are scour­ing in­dus­try and cor­po­rate data to build data­bases that best cap­ture the con­sumer emer­gence.

More and more, the Chi­nese con­sumers’ habits may look fa­mil­iar. There may even be data for that Amer­i­can lunch China is sup­posed to be eat­ing.

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