China FX/Rates Monitor: Resilient CNY amid Dollar Strength, Low Rates amid Growth Weakness

Research evidence excerpt

China FX/Rates Monitor: Resilient CNY amid Dollar Strength, Low Rates amid Growth Weakness

Economics Research

8 July 2026 | 9:55AM HKT

China FX/Rates Monitor: Resilient CNY amid Dollar Strength, Low Rates

amid Growth Weakness

Our monitor tracks the latest developments and identifies key indicators for China FX Xinquan Chen

+852-2978-2418 |

and rates, including valuations/policy stance, technicals, flows, and fundamentals. xinquan.chen@gs.com

Goldman Sachs (Asia) L.L.C.

Below we summarize our key takeaways on the China FX and rates markets.

Danny Suwanapruti

+65-6889-1987 |

n Growth worries have increased, but expectations for broad easing remain danny.suwanapruti@gs.com

Goldman Sachs (Singapore) Pte

low. May activity data suggests domestic demand has weakened visibly. Retail

sales fell 0.6% yoy in May, and the single-month FAI declined 10.6% yoy. Retail

sales weakness partly reflected the fading boost from trade-in subsidies and a

high base, while FAI weakness was mainly driven by slower fiscal policy

implementation and still-weak property investment. Our growth decomposition

suggests domestic demand grew only by 1-2% yoy in April-May. While nominal

export growth remained strong, real export growth slowed to around 4.5% yoy in

the recent two months, down from 15.2% yoy in Q1. Taken together, these point

to risks of below 4.5% yoy real GDP growth in Q2, in line with clients’ growing

concerns over slower economic activities. That said, expectations for broad

easing remain muted: the 4.5-5.0% growth target range gives policymakers more

tolerance for temporary growth softness, and China’s policy reaction function

has remained reactive rather than proactive. In our view, the near-term policy

response is more likely to come through faster fiscal policy implementation,