Barys Zhaliba: Weak yuan will speed up expulsion of Belarusian exports from Russia

Along with internal problems of the unreformed economy, the yuan devaluation will become an additional reason for a decline in Belarusian exports.

Economist Prof. Barys Zhaliba said it to charter97.org, commenting on possible consequences of the Chinese yuan devaluation for the Belarusian economy.

– China's central bank further devalued the yuan by 1.6% on Wednesday. The decline on Tuesday was 1.9%, which became the biggest devaluation for the last two decades. What are economic reasons behind it, in your opinion?

– It is yet difficult to understand whether it is a one-time 1.9% devaluation, or the yuan will fall further. But this is the fact, and we must view it in the context of common processes in the Chinese economy.

China's economic growth has slowed down in the past few months. The Chinese financial market is reported by the media to have dropped significantly in the past weeks. All indexes went down.

As it happened in other financial markets, the bubble based on the artificial growth of Chinese securities has burst. The People's Bank of China spent billions of dollars in an attempt to slow down the fall.

The general situation in the Chinese economy resulted in the decision of the Chinese authorities to devalue the yuan. Until recently, the yuan was growing amid the US's recommendations to devalue it. China was against such a measure for a long time, trying to support its exports and boost its development.

China's exports grew rapidly. The speed has decreased lately, and some directions are in the red. This and the fall in the financial market made China devalue the yuan, as the US and Europe insisted.

– How can it affect the Belarusian economy, taking into account the increased influence of Chinese business in Belarus, joint investment and credit programmes, and, according to Xi Jinping, the inclusion of our country into the New Silk Road project?

– How will it affect the Belarusian economy? I think it won't affect us strongly, because the yuan devaluation is insignificant, though the Chinese currency was always stable before that. Of course, competitiveness of Chinese exports will grow. It will influence the Belarusian market and domestic goods.

The weakened yuan will have negative consequences for Belarusian goods in the Russian market. China has always supported its exporters, and, as we know, the devaluation of the national currency is always good for exports. The presence of Chinese goods in the Russian market will increase, and Belarus will lose its traditional niches.

Taking into account the fact that the yuan devaluation was insignificant, it won't have much influence on the reduction of Belarusian exports to Russia. The main factor here is our internal problems: a decline in competitive ability, quality and technical level of Belarusian goods. We have been seeing these problems for many years.