China's central bank issued a statement rejecting foreign accusations that China is deliberately weakening the yuan to gain a trade advantage, affirming that China has no need and no intention to devalue its currency to compete with other countries, and that blaming other countries' exchange rates for declining competitiveness is a way of avoiding responsibility for solving one's own problems. The move came as Maroš Šefčovič, the European Union's trade chief, visited Beijing to discuss reducing the EU's trade deficit with China, amid European leaders' concerns over a "China Shock 2.0." China's trade surplus hit a record of nearly 1.2 trillion US dollars in 2025, equal to about 6% of gross domestic product. Meanwhile, EU data show that in 2025 the EU ran a trade deficit with China of 360.6 billion euros, or 404 billion US dollars, up 15% from 2024. German Chancellor Friedrich Merz estimated that the yuan is undervalued by 25-30%, while European Central Bank President Christine Lagarde called on world leaders to discuss the issue, and Goldman Sachs said in August that the yuan is undervalued by at least 20% according to the firm's valuation model. But China's central bank argued that model estimates alone cannot prove that the yuan is undervalued, stressing that market mechanisms play the decisive role in setting the exchange rate, and that China does not set a pre-determined target level for its currency or intervene in long-term currency trends. The yuan has strengthened by about 4% against the US dollar since the start of this year, and since China reformed its exchange rate system in 2005, the yuan has appreciated by about 23%, from 8.27 yuan per US dollar to about 6.7 yuan per US dollar today. In addition, China's central bank said China will begin reporting additional foreign exchange-related data to the International Monetary Fund starting in 2027, and under its 2026-2030 economic development plan, China will drive growth mainly through domestic demand, promoting consumption, expanding effective investment, and opening up further.
China's central bank denies deliberately weakening the yuan and stresses market-set exchange rates, pushing back on undervaluation claims; the yuan has strengthened ~4% vs the dollar this year.
