Xi and Trump engage in diplomatic talks, sparking optimism amid ongoing Yuan decline

Recent diplomatic engagements between President Xi Jinping and US President Donald Trump have sparked optimism among scholars regarding a thaw in China-US relations. 

However, experts caution that the yuan is likely to continue its downward trajectory.

Political analyst Derek Yuen Mi-chang said on a TV program Tuesday that the recent phone call between Xi and Trump, along with Vice President Han Zheng's discussions with US officials, indicate a positive shift in bilateral relations. 

"China may consider offering more preferential treatment to Elon Musk, which could facilitate the expansion of his business in China and contribute to a more favorable atmosphere between the two nations," Yuen said, adding that the current outlook is not entirely pessimistic.

Conversely, Tso Hei-sing, convenor of the Society for Advanced Study of International Relations, warned that the yuan's decline is expected to persist, even as offshore yuan exchange rates against the US dollar and Hong Kong dollar have recently reached their highest levels in two and a half months following Trump's inauguration. 

"China's focus will primarily be on improving living standards and ensuring social stability, rather than prioritizing Hong Kong," Tso said. 

He also said that Trump is likely to concentrate more on trade relations with China and adopts a relatively moderate stance on Taiwan when compared to former President Biden.

(Marcus Lum)