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Goldman Sachs has put a number on something currency markets have been whispering about for months: the US dollar is overvalued against the Chinese renminbi, and not by a small margin. The bank’s strategists estimate the RMB is undervalued by roughly 20% against the greenback.
The timing is anything but accidental. The assessment lands as President Trump heads to China for meetings with President Xi Jinping, turning a dry currency valuation note into something with genuine geopolitical charge.
What Goldman’s numbers actually say
The team led by strategist Kamakshya Trivedi used Goldman’s proprietary valuation models to arrive at the 20% undervaluation figure. In English: if the RMB were trading where economic fundamentals suggest it should, it would be dramatically stronger against the dollar than it is right now.
The current USD/CNY exchange rate sits at approximately 6.79. Goldman projects that rate will drift down to 6.70 over the next six months, then further to 6.50 within a year. That trajectory implies roughly 4.5% appreciation for the renminbi.
Goldman’s own analysis acknowledges that sustained moves in either direction require macroeconomic catalysts. Valuation gaps can persist for years if the underlying policy environment keeps them propped up.
The long history of dollar-RMB tension
The issue reached a formal legislative crescendo with the 2008 China Currency Manipulation Act, which sought to classify Beijing’s exchange rate practices as a form of trade subsidy. That effort captured the core frustration: American manufacturers were competing against products priced in a currency that critics said was artificially depressed.
As tariffs escalated during the US-China trade war, the RMB depreciated against the dollar, partially offsetting the cost impact of American duties on Chinese goods. In effect, a weaker renminbi acted as a natural hedge for Chinese exporters. Every percentage point the currency fell clawed back some of the competitive ground that tariffs were supposed to take away.
What this means for investors
Goldman’s own six-month and twelve-month forecasts project only about 4.5% of that 20% gap closing, which tells you even the bank’s own strategists don’t expect a sudden snap-back.
If the RMB does strengthen as Goldman projects, a stronger renminbi makes Chinese imports more expensive in dollar terms, which could affect everything from consumer electronics pricing to input costs for US manufacturers sourcing components from China. For investors with exposure to Chinese equities, RMB appreciation would provide a tailwind. Returns denominated in renminbi would translate into more dollars when converted back. A stronger RMB also means Chinese earnings are worth more in dollar terms for US companies generating revenue in China.
Goldman’s overvaluation assessment isn’t limited to the RMB. Multiple valuation frameworks suggest the greenback is stretched across several currency pairs, which means a broader dollar weakening cycle could amplify RMB gains beyond what bilateral factors alone would produce.
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English (US) · 