China Rebuts EU Pressure Over 'Yuan Undervaluation': "We Don't Secure Export Competitiveness Through Exchange Rates"

Defends exchange-rate policy as trade talks with EU begin
Counters IMF analysis: "Exchange-rate adjustments cannot resolve structural imbalances"

China, which has begun trade negotiations with the European Union (EU), has defended its yuan exchange-rate policy.

According to Bloomberg and China's state-run Xinhua News Agency on October 9, the People's Bank of China (PBOC) issued a statement in Chinese and English the previous day defending its existing policy for managing the yuan's exchange rate.

The PBOC argued that exchange-rate adjustments alone cannot resolve structural imbalances in the global economy. It also said China's export competitiveness stems from improvements in industrial competitiveness, not from its exchange-rate policy. "China has neither the need nor the intention to gain a competitive advantage by devaluing its currency," it stressed.

The statement came as Maros Sefcovic, the European Commissioner for Trade and Economic Security, visited China and began two days of trade talks with Wang Wentao, China's commerce minister. The PBOC did not refer to the talks directly, but the statement has drawn attention because it was issued as the EU has been pointing to the yuan's undervaluation as a cause of trade imbalances with China.

Recently, EU officials have highlighted exchange rates as a cause of trade imbalances with China. The yuan has recently gained value against the U.S. dollar and the euro, among other currencies. The euro, in particular, has fallen more than 10% against the yuan from its peak in January this year, weighed down by Europe's sluggish growth and France's fiscal problems.

However, some analyses indicate that the yuan remains undervalued based on the real effective exchange rate (REER), which takes into account price levels and the currencies of trading partners. The International Monetary Fund (IMF) estimated that China's REER was 12% to 20% undervalued compared with those of its competitors last year.

In response, the PBOC said using such estimates as official evidence was "a misinterpretation and misuse." It also said it would begin reporting relevant data to the IMF next year to improve transparency in foreign exchange market operations.

This content was produced with the assistance of AI translation services.