MacroVoices · Thursday, August 13, 2026
Michael Howe suggests that China might manage a bifurcated exchange rate regime to devalue its currency internally while maintaining a stable yuan-US dollar rate externally. This strategy could help address China's debt burdens and economic challenges.
“The Chinese economy can't stomach debt. debt for much longer, this degree of debt. and they basically have to devalue debt domestically. In other words, that means devaluing the yuan internally. while trying to maintain a stable yuan, US dollar externally.”
“China has capital controls as you know. It has large foreign exchange reserves. and it has compliant state banks. and they can probably manage, uh, you know, a bificated exchange rate regime.”