Goldman Sachs holds its 12-month USD/CNY forecast at 6.40 as exports surge 36.3%. Weak domestic demand has led the bank to cut its CPI forecasts for 2026 and 2027.
China's General Administration of Customs reported a $133.5 billion trade surplus for September, an unusually strong counterweight to Goldman Sachs's weaker domestic-price outlook. Exports rose 36.3% year on year on October 14, while imports gained 31%. The surplus climbed from $119.1 billion in August to a record monthly high. From January to September, it reached $938 billion, compared with about $1.2 trillion for all of the previous year. Those figures put Goldman's currency forecast in sharper context, though they do not show how much export strength can offset soft demand at home.
USD/CNY was near 6.6929 on Thursday afternoon, little changed on the day. Goldman's 12-month forecast is 6.40, around 4.4% below that rate; its three-month forecast is 6.70. At a lower USD/CNY rate, one US Dollar buys fewer Yuan.
Exports provide support
China's 36.3% export growth was its fastest since February. Imports rose at their quickest pace since June. Goldman economist Chelsea Song said the acceleration was consistent with strong container-shipping volumes. Exports also rose sequentially across major trading partners. Imports from major partners increased sequentially too, with the US the exception. September exports to the US were up almost 39.6% year on year, outpacing China's overall export growth.
That breadth matters for the currency. Export receipts can bring in foreign currency that is converted into Yuan, although companies may retain earnings overseas. Goldman's broader outlook remains cautious: the bank expects real GDP growth of 4.5% year on year in 2026, citing export strength alongside headwinds from weak domestic demand. Hao Zhou, head of research and chief economist at Guotai Junan International Holdings, said the record $133.5 billion surplus showed the strength of China's external sector despite continued concerns about domestic demand.
Exports rose broadly from August to September. Apparel recorded the largest increase, followed by footwear and suitcase products. Imports also rose broadly, led by energy products, mostly natural gas. Customs data show the cumulative value of semiconductor exports was up 108.1% year on year in January to September.
Trade values alone do not show how many goods were shipped. Semiconductor exports rose 136% year on year by value in September, compared with 129.8% in August. By volume, they increased 1% after falling 7.9% in August. That gap matters when judging whether the export increase reflects more shipments or higher prices.
Domestic prices remain subdued
Higher producer prices have yet to feed through to stronger consumer inflation. China's headline CPI rose 0.9% year on year in September, up from 0.8% in August. Energy and transportation services contributed to the increase. Month on month, CPI rose 0.2%, 0.2 percentage points slower than in August. Core inflation, which excludes food and energy, held at 1% year on year. Consumer prices averaged 0.9% higher in the first nine months of 2026. The National Bureau of Statistics published the September figures on October 14.
Headline PPI inflation climbed to 5.0% from 3.8%, mainly as energy goods and chemicals became more expensive. The monthly increase accelerated to 1.2% from 0.4% in August. The annual rate was the highest since June 2022. The 4.1 percentage-point gap between PPI and CPI was the widest since May 2022. The National Bureau of Statistics release reported the consumer and producer price data.
Goldman economist Xinquan Chen expects the PPI rate to turn negative as early as Q2 next year, when this year's price increases drop out of the annual comparison. Chen also points to weaker domestic demand and the third-quarter CPI reading as reasons for a softer consumer-price outlook.
The bank cut its full-year CPI forecasts for 2026 and 2027 to 0.8% and 0.6%, respectively, from 1.0% for each year. Goldman attributes the revisions to weak domestic demand and an expected fading of the energy-price boost in 2027.
A large trade surplus does not establish that China needs tighter monetary policy. Export income may support the Yuan, while weak consumer inflation gives policymakers a separate reason to keep domestic conditions accommodative. The trade figures alone do not determine how exchange-rate management will balance those pressures.
What the forecast implies
An earlier China data preview framed trade and inflation releases as a test of recent Yuan gains. September's figures add a record surplus to that picture, while Goldman's lower CPI projections keep weak domestic demand central to the outlook.
The detailed breakdown of trade by country and product is due for release on October 20. It will provide more detail on the sources of export growth.
