Why should China move to a weak currency (renminbi) strategy?

China’s economic strategy has long been to base growth more on domestic demand and less on exports. It then made sense for China to have a strong currency strategy, which boosted the purchasing power of Chinese consumers and improved the terms of trade for companies. But population ageing is undermining this strategy; it is weakening domestic demand and forcing China to revert to an export-driven growth strategy. It is therefore normal for China to switch to a strategy based on improving manufacturing cost competitiveness, and therefore on a weak currency, and this major change in the foreign exchange strategy is starting to be seen today.