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China defends yuan policy as Europe steps up pressure over trade surplus
Reuters • • business
Key Points:
- China’s central bank, the People's Bank of China (PBOC), denied accusations of competitive currency depreciation, stating it has never sought to weaken the yuan for trade advantage amid rising foreign criticism.
- European policymakers, including EU trade chief Maros Sefcovic and German Chancellor Friedrich Merz, have called for a stronger yuan to address China’s record trade surplus, which reached nearly $1.2 trillion in 2025.
- The PBOC emphasized that the yuan’s exchange rate is influenced by multiple economic factors and that China allows market forces to determine the currency’s value without preset targets or long-term intervention.
- Despite a 4% appreciation against the dollar this year and a 23% rise since 2005, the PBOC acknowledged uncertainty in the yuan’s outlook due to conflicting pressures for appreciation and depreciation.
- China plans to enhance transparency by reporting more foreign exchange data to the IMF starting in 2027 and aims to shift toward a domestic demand-led growth model from 2026 to 2030 to support a balanced global economy.
