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      MUFG Reports on Yuan Support Amid Uneven Economic Recovery in China

      MUFG has indicated that China's firmer economic growth in the third quarter provides a more supportive environment for the yuan. The country's GDP growth rose to 4.5% from 4.3% in the previous quarter, slightly surpassing expectations. Industrial production also saw an increase, accelerating to 5.5% in September. However, the bank cautions that the recovery is primarily driven by factories and exports, which leaves China vulnerable to external demand fluctuations and trade tensions.

      Despite improvements in industrial output, household spending remains weak, with retail sales growth only rising to 1.1%, aided by the timing of the Mid-Autumn Festival. Property investment has continued to decline, falling approximately 21% in the first three quarters of the year, which poses challenges for the construction sector. This uneven recovery raises concerns about the sustainability of support for the yuan, as a more balanced growth that includes stronger consumer demand would provide a more stable foundation.

      Monetary policy is another critical factor influencing the yuan's outlook. The People's Bank of China has announced it will conduct daily overnight funding operations until November 2, following indications from Governor Pan Gongsheng that the central bank may consider adjusting its main policy rate. If a lower policy anchor is established, it could counteract some of the support provided by the recent economic growth.

      © 2026 KLEA News. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

      Source: KLEA News

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