Exchange rate stability 'best' available option for policymakers

Despite facing a substantial external demand gap caused by US tariffs, keeping the renminbi exchange rate generally stable as much as possible should remain the best option for Chinese policymakers, said leading economists and policy advisers.

Instead of tolerating a sharp depreciation by the local currency against the US dollar to buffer the shock on exports, China should launch a pro-consumption policy package of over 1 trillion yuan ($137.2 billion) while ramping up subsidies for heavily affected exporters and workers, they said.

"While local currency depreciation can possibly enhance export competitiveness, its impact may be limited in the face of significant trade barriers," said Huang Yiping, dean of Peking University's National School of Development and a member of the China Finance 40 Forum, a top think tank.