Chinese exports saw a boost in November, climbing 5.9% compared to the same time last year, even with a stronger Chinese Yuan (CNY). The USD/CNY exchange rate hit its lowest point since last summer, but the strong yuan did not hinder exports. This quarter, the CNY strengthened against almost all G-10 currencies, except for a few like the South African rand and Malaysian ringgit. Low inflation, especially for producers, helps Chinese exporters stay competitive despite the yuan’s gain in value.

Producer Prices And Export Advantage

In the past year, producer prices in China fell by 2.1%, while prices in the US went up by 2.7%. This creates about a 5% cost advantage for Chinese exporters, keeping the real value of the CNY weaker and favoring exports. The yuan’s recent strength isn’t as harmful to China’s economy as it seems. In November, Chinese exports grew significantly due to falling producer prices, which keep the country’s goods attractive globally. This means that, when adjusted for inflation, the yuan is effectively weaker, creating a good environment for exporters. We expect this trend to show up in the upcoming inflation data, which should confirm ongoing producer price drops. Looking back from late 2025, this isn’t a new situation; similar deflationary pressures were seen in 2023 and 2024, helping to support the economy. This lasting cost advantage suggests that Chinese export momentum could continue into the first quarter of 2026.

Implications For Traders And Investors

For those trading foreign exchange derivatives, this indicates that betting on a significant drop in the yuan (a higher USD/CNY) may be risky. The People’s Bank of China has less reason to act against the yuan’s strength while exporters remain competitive. Therefore, strategies like selling out-of-the-money USD/CNY call options to earn premiums could be beneficial, taking advantage of potential stable trading in the coming weeks. This situation also affects equity and commodity markets, as strong exports support corporate earnings and industrial demand. Recent data, like the Caixin Manufacturing PMI for November, which stayed above the growth mark of 50.0 for the fourth month in a row, supports this outlook. We could consider bullish positions on Chinese A-share index futures or commodities like copper, which are closely linked to Chinese manufacturing activity. Create your live VT Markets account and start trading now.

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