China defends yuan policy as Europe steps up pressure over trade surplus
FXI•China's central bank denied that the country weakens the yuan for a trade advantage as European officials press for a stronger currency. China's 2025 trade surplus reached nearly $1.2 trillion, while its trade deficit with the EU was €360.6 billion.
1. China rejects currency claims
The People's Bank of China said China has never pursued competitive currency depreciation, rejecting claims that it keeps the yuan artificially weak to gain a trade advantage. The statement came as EU trade chief Maros Sefcovic visited Beijing to discuss narrowing the bloc's trade deficit with China.
2. Trade imbalances draw pressure
China's 2025 trade surplus reached nearly $1.2 trillion, about 6% of GDP. The EU's trade imbalance with China reached €360.6 billion in 2025, up 15% from the previous year, according to EU data. European policymakers have called for a stronger yuan, while German Chancellor Friedrich Merz has said the currency is undervalued by 25% to 30%.
3. PBOC describes exchange policy
The PBOC said market forces play a decisive role in exchange-rate formation and that it does not preset a target or intervene in the yuan's long-term trend. The yuan has risen about 4% against the dollar this year, and China will report additional foreign-exchange-related data to the International Monetary Fund starting in 2027.
