Back in November, I attended a small roundtable discussion hosted by Gateway House that included an official from the People’s Bank of China. I asked this official whether theconfusion over the PBOC's decision a few months earlier to devalue the yuan had caused the central bank to rethink its communications strategy. It had, she said; the PBOC at a minimum intended to hold more press conferences to explain itself.
Perhaps it was beginning to dawn on China’s leaders that the rest of the world doesn’t trust them? The devaluation in August was small and technical. But investors conditioned to think that China sets its exchange rate only to the advantage of its exporters saw the move as a signal that the economy was in trouble. Money rushed out; and money still is rushing out, suggesting the PBOC and other authorities need to do more than hold more press conferences. China since August has spent more than US$300 billion of its foreign-exchange reserves to keep the yuan’s value from collapsing. A good PR agency could have been hired for much less.
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