There’s a strong case for a weaker yuan

TOKYO – Some good news for a change: The coming decline in China’s currency is just what President Xi Jinping’s economy and the global financial system need.

It’s enough to make Donald Trump’s head explode, but a weaker yuan would be a welcome development in Washington. As much as US officials abhor weak Asian exchange rates, they are very keen to steady a wobbly dollar.

China’s exchange rate about-face will be less about manipulation and more about the People’s Bank of China and the Federal Reserve pivoting in divergent directions. The PBOC will be easing, of course, to avoid a deeper property market slump. And the Fed needs to start hiking interest rates to tame surging consumer prices.