China's Commerce Ministry says yuan depreciation will stimulate exports

 A senior official at China's Ministry of Commerce said on Wednesday that the depreciation of the yuan will boost Chinese exports.
A senior official at China's Ministry of Commerce said on Wednesday that the depreciation of the yuan will boost Chinese exports.PHOTO: AFP

BEIJING (REUTERS) - A senior official at China's Ministry of Commerce said on Wednesday that the depreciation of the yuan will boost Chinese exports.

"The adjustment to the yuan's exchange rate, especially the downward move, will have some stimulative impact on exports," Zhang Yuzhong, deputy director of the investment promotion bureau at the Ministry of Commerce, told a news conference.

China's yuan hit a four-year low on Wednesday, slipping further after the central bank cut its yuan reference rate by 1.62 per cent, its second such move in two days. Authorities shocked global financial markets by devaluating the yaun by nearly 2 per cent on Tuesday.

The move was billed as a free-market reform but some suspect could be the beginning of an engineered, longer-term deprecation of the exchange rate intended to boost ailing exports.

China's exports posted a surprise slide in July, dropping 8.3 per cent on weak demand from Europe and Japan.

Regardless of Beijing's motives, analysts said the roughly 4 per cent decline in the yuan so far this week was too mild to spur global demand for Chinese goods, while a steeper decline would likely take many months to pay dividends.