People's Bank of China Rejects EU Currency Manipulation Claims

The People's Bank of China rejected accusations from European policymakers that it maintains an artificially weak yuan to secure a trade advantage. The dispute follows intensified pressure from the European Union to strengthen the currency to curb China's record trade surplus, which reached nearly $1.2 trillion in 2025.

EU trade chief Maros Sefcovic visited Beijing to discuss narrowing the bloc's trade deficit, which grew 15% to 360.6 billion euros in 2025. German Chancellor Friedrich Merz and Goldman Sachs estimated the yuan is undervalued by 20% to 30%, prompting calls for a monetary policy dialogue. Christine Lagarde, President of the European Central Bank, also urged global leaders to address the currency's undervaluation.

The central bank argued that China's trade strength stems from industrial competitiveness rather than currency manipulation. It stated that it does not preset exchange-rate targets and maintains currency flexibility. As part of a shift toward a domestic demand-led growth model for 2026-2030, the bank announced that China will report additional foreign exchange data to the International Monetary Fund starting in 2027.