China is carefully following the US dollar to avoid Trump's whereabouts

The most powerful product in the United States is neither technology nor a specific manufactured product, but it is the US dollar. The position of the dollar on the Chinese market, its competitiveness vis-à-vis the Chinese yuan and the influence of its dominance will always be a major concern for the United States.

Negotiators have closely monitored exchange rates since the beginning of the trade dispute between the two countries.

The Chinese yuan reaches a psychological break point of 7 RMB against 1 USD. It is at 6.92 and is expected to continue to decline as the People's Bank of China struggles to keep it below 7.

If it exceeds 7 marks, Chinese products exported to the United States will be cheaper, while US products exported to China will cost more, but this will not offset the new tariff increase imposed by the United States.

This is how China is trying to change the rules of the game without angering the United States, which has accused the Chinese of monetary manipulation in the past.

China is preparing for structural changes in its financial market as its main strategy, which means opening up its financial market, one of the central points of trade talks between Beijing and Washington, said Anbound Malaysia.

"Under the pressure of trade friction between the United States and China, China has chosen to open its market, among which the most important aspect is financial openness.

"In China, the bond, equity, futures and ratings markets, as well as the brokerage and investment banking markets have all broadened their exposure to the outside world.

"Overseas funds are being deployed and have expanded their access to the Chinese capital market. Hedging tools, such as futures, are subject to strict management and may be included in the opening of financial markets, "says Anbound.

China is looking to add more trading products in China's financial markets to the index, such as the MSCI Index, the FT FTSE Index and the Bloomberg Bond Index, among others.

All of these elements, combined with service advice and the driver of technology, will increase the allocation of international capital to the Chinese capital market and encourage more foreign capital to enter China, said the research firm. adding that this would lead to greater transparency.

"The financial opening is an inevitable path for China, and China must carefully consider the adaptation of the relevant policy. This requires time and will test. Neither will there be fundamental change in the short term. The flow of funds will also be
change the Chinese securities market.

"The funds of some Chinese companies will be absorbed by foreign capital and some corporate funds that exit the securities market could turn to industrial capital. If this type of capital transfer occurs, the results will be "pretty" significant and in the meantime produce a series of complex effects and changes, "says Anbound .- / TISG.