Goldman's yuan call is probably right and almost certainly early

Teresa Alves and the Goldman FX team are forecasting USD/CNY at 6.50 by mid-2027, implying roughly 4.5% renminbi appreciation from here. The valuation case is real. GSDEER pegs fair value near 5.00, GSFEER implies about 12% undervaluation. Two proprietary models, two different answers, both pointing the same direction. The yuan is cheap by almost any framework you use.

The harder question is always the catalyst. Valuation gaps in managed currencies don't close because a model says they should. They close because someone with control over the fix decides to let them close, and usually for reasons that have nothing to do with purchasing power parity. What Goldman's analysis actually describes, underneath the price path, is a political window. The Trump-Xi summit creates a moment where controlled appreciation is useful to Beijing as a negotiating posture. An $87.7 billion trade surplus with the U.S. is a number that shows up in every tariff conversation. Signaling a stronger yuan costs China relatively little and buys goodwill on the margin. That is a different mechanism than genuine revaluation driven by domestic reflation or capital account liberalization.

The PBOC set the USD/CNY reference rate at 6.8961 on May 7. That fix was read widely as a deliberate signal ahead of the summit. Maybe. Or it was a data point in an ongoing managed drift that would have happened anyway. The distinction matters more than it sounds. A signal tied to summit dynamics unwinds when the summit ends. A genuine shift in PBOC tolerance for appreciation has a longer half-life. The number to watch isn't 6.50. It's what the fix looks like three weeks after the talks conclude.