Key facts
- China's central bank denied using yuan depreciation for trade advantage.
- The People's Bank of China (PBOC) stated it has never engaged in competitive currency devaluation.
China's central bank rejected claims it deliberately weakens the yuan to boost exports, stating the currency's value is market-determined. The People's Bank of China pushed back against criticism from trading partners, including the EU, who cite trade imbalances as a consequence of currency undervaluation. The yuan has strengthened against the dollar this year.
The PBOC's firm denial of currency manipulation aims to counter international pressure regarding trade imbalances and could influence future trade negotiations and currency market sentiment. The EU and other trading partners have long cited currency valuation as a key factor in their trade deficits with China.
China's central bank has rejected criticisms from Western trading partners, including the EU, that it deliberately weakens the yuan to gain a trade advantage. The People's Bank of China (PBOC) stated in a statement that it has no need or intention to use yuan depreciation for competitive purposes and has never engaged in competitive currency devaluation.
The PBOC's remarks push back against claims that China keeps its currency undervalued to make its exports cheaper and imported goods pricier. These comments come as the EU's trade chief, Maros Sefcovic, was in Beijing to discuss narrowing the bloc's trade deficit with China.
Despite a widening yield gap between US and Chinese government bonds, the yuan has strengthened approximately 4% against the US dollar so far this year. In a June speech, European Central Bank President Christine Lagarde had urged global leaders to discuss the undervaluation of the Chinese currency as a factor contributing to global economic imbalances. The EU is concerned about its trade imbalance with China, which reached €360.6 billion in 2025, a 15% increase from the previous year, according to EU data.
The PBOC asserted that China allows the market to play a decisive role in exchange rate formation, adding that it does not preset exchange rate target levels or intervene in long-term exchange rate trends. "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 amounts to evading and shirking one's own responsibility for making necessary adjustments," the central bank said.
Additionally, the central bank announced that China will begin reporting additional foreign exchange-related data to the International Monetary Fund starting from 2027.
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