Societe Generale notes China’s trade surplus widened to USD 105.4 billion in May, driven by a 19.4% year‑on‑year surge in exports led by AI‑related equipment. They argue this backdrop supports CNY appreciation, though recent bullish momentum has stalled, with authorities balancing targeted easing, tighter capital controls and measures to encourage offshore retention of export proceeds.

AI‑driven exports back Yuan resilience

“In China, the trade surplus widened to a larger than forecast $105.43bn in May from $84.82bn in April. The 19.4% yoy rise in exports was AI-driven as outbound shipments of computers and parts soared 66% while sales of integrated circuits abroad more than doubled.”

“The data is supportive of CNY appreciation though we have seen bullish momentum ground to a halt last week. The currency remains best-performer in Asia, acting as a regional anchor and safe haven and we are watching daily PBoC fixings closely for signals from the authorities who are balancing targeted easing with tighter capital controls.”

“As flagged, regulators are nudging banks to step up USD deposit mobilisation (allowing rates above SOFR) to encourage corporates to retain export proceeds offshore and lean against yuan strength without overt intervention.”

“At the same time, enforcement on cross-border flows is tightening, with reports of renewed crackdowns on illegal offshore trading, stricter oversight of unlicensed brokers, and forced closure of non-compliant accounts pointing to a clear bias toward capital retention.”

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