From exchange rates to fiscal policy, there has been a subtle shift in China's foreign trade support strategy.

The drastic changes in the economic environment have already led to different choices in the macro policy toolbox.

The recent stability and slight appreciation of the RMB exchange rate has completely overturned traditional perceptions,” said a head of a foreign trade company. Unlike the strategy during the China-U.S. trade war in 2018, which relied on currency devaluation to support exports, China is currently directly subsidizing foreign trade through fiscal measures while maintaining a stable exchange rate. This shift in policy combination reflects profound changes in China's economic environment.

The coexistence of a strong exchange rate and resilient exports.

As of October 2025, the renminbi's central parity against the U.S. dollar has risen to below 7.10, reaching a temporary high. Since the beginning of this year, the cumulative adjustment of the renminbi central parity has reached 966 basis points, and the CFETS renminbi exchange rate index has maintained between 95.58 and 96.94, showing significant resilience.

In stark contrast, export data also performed strongly. In the first eight months of 2025, China's export scale reached 17.6 trillion yuan, a year-on-year increase of 6.9%; in the first ten months, the total export value reached 22.12 trillion yuan, a year-on-year increase of 6.2%. Mechanical and electrical products and high-tech products led export growth, with the trade structure continuously optimizing and upgrading.

The strength of the renminbi coexists with the resilience of exports, which is vastly different from the situation in 2018. At that time, under the pressure of the China-U.S. trade war, the renminbi depreciated from 6.5 to 6.86 against the U.S. dollar, a depreciation of 5.4%, helping export enterprises relieve pressure through currency depreciation.

The logic of choosing policy tools has changed.

This transformation stems from profound changes in China's economic fundamentals:

In 2018, China's economy maintained a strong growth momentum, and exchange rate depreciation would not trigger massive capital outflows. At the same time, the sudden escalation of the China-U.S. trade war meant that the depreciation of the renminbi could quickly hedge against the impact of U.S. tariffs. As analysis pointed out, at that time, "the breakdown of China-U.S. trade negotiations and the rapid deterioration of domestic and international situations led to an intensification of monetary policy divergence, and the renminbi began to depreciate rapidly."

However, the current economic environment is very different. Domestically, there is insufficient demand and deflationary pressure, and investment and consumption need to be boosted. Allowing the renminbi to depreciate significantly at this time could lead to a rapid withdrawal of foreign capital, exacerbating domestic liquidity tensions. The deputy director of the Bank of China Research Institute, E Zhihuan, pointed out that "neutrality in exchange rates will become a hallmark of a strong renminbi," suggesting that "the renminbi should become less sensitive to exchange rate fluctuations to some extent, and monetary policy should adjust more based on domestic economic changes."

Fiscal policy replaces monetary policy to exert precise efforts.

The replacement for exchange rate tools is the precise implementation of fiscal policy. In the first half of 2025, the amount of export tax rebates reached 1.27 trillion yuan, a year-on-year increase of 11.6%, effectively reducing enterprise costs.

Local finances are also taking active action. Tianjin has increased the support ratio and limits for domestic and foreign exhibitions; Sichuan Province has launched the "Tianfu Foreign Trade Loan," with provincial finance providing interest subsidies to enterprises at an annual interest rate of 1.5% based on the loan amount. These measures are highly targeted and directly support foreign trade enterprises in expanding their markets.


Policy coordination and future direction

The current policy places more emphasis on the synergistic effect of finance and finance. The head of the Monetary Policy Department of the People's Bank of China stated: "China's macroeconomic fundamentals are solid, and the balance of payments is expected to maintain autonomous equilibrium, providing a solid foundation for medium- to long-term exchange rate stability."

This synergy is reflected in: monetary policy maintaining basic stability in the exchange rate to avoid massive capital flows; fiscal policy supporting foreign trade through targeted subsidies, with both working in concert. CITIC Securities' research report believes that "if there are no unexpected changes in exports, the renminbi exchange rate is expected to show a moderate appreciation overall."

Looking ahead, this policy combination may continue. As the transformation of China's economic structure deepens, high-tech manufacturing has become the leader in industrial growth, with the value added in August increasing by 9.3% year-on-year. These high-quality export products are less sensitive to exchange rates and require more precise support from fiscal policy in research and market expansion.

Summary:

From relying on exchange rate tools to support exports in 2018 to currently supporting foreign trade through fiscal means while maintaining a stable exchange rate, the changes in China's macro policy toolbox reflect a profound adjustment in economic development stages and policy goals. When the focus of economic work shifts to "stabilizing investment and ensuring domestic demand," exchange rate stability becomes key to attracting foreign investment and maintaining market confidence. Meanwhile, the precise implementation of fiscal policy provides strong support for enterprise transformation, upgrading, and expanding international markets.