Beijing Draws the Line: The Yuan Is Not the Problem
Magna BureauChina's central bank published a rare, systematic defense of the yuan just as Europe's trade chief pressed Beijing on a 360.6-billion-euro deficit. The real fight is over who must pay for rebalancing the global economy.
Beijing picked the exact day the audience was in the room. On Thursday, October 8, as European Trade Commissioner Maros Sefcovic sat down with Chinese Commerce Minister Wang Wentao for the second session of the EU-China Trade and Investment Council, the People's Bank of China published something it rarely publishes: a full, systematic paper on where China stands on the renminbi exchange rate. The title was bureaucratic. The message was not.
China, the central bank said, has no need or intention to obtain a trade-competitive advantage through exchange-rate depreciation, and has never engaged in competitive currency depreciation. The paper went further than denial. It accused the accusers. Attributing a decline in domestic industrial competitiveness, the weakening of fiscal and financial discipline and complex structural problems simply to the exchange rates of other nations, the People's Bank said, amounts to evading and shirking one's own responsibility for making necessary adjustments. In the polite vocabulary of central banking, that is a slap.
The timing was the argument. Europe's goods trade imbalance with China reached 360.6 billion euros in 2025, up 15 percent, according to EU data. European leaders have begun to fear a "China Shock 2.0" as Chinese industrial exports surge into the single market. In June, European Central Bank President Christine Lagarde urged global leaders to put yuan undervaluation on the agenda as one of the imbalances endangering the world economy. Germany's Chancellor Friedrich Merz has said the yuan is undervalued by 25 to 30 percent. Goldman Sachs said in August that some of its valuation models put the gap at 20 percent or more. From the United States to the IMF, major trading partners have increasingly cited a weak yuan and industrial overcapacity as the drivers of China's record surplus, and those concerns have fueled tariff threats and calls for Beijing to let the yuan appreciate.