EU leaders demand yuan currency dialogue to address €360B trade deficit

German Chancellor Friedrich Merz and French President Emmanuel Macron are calling for renewed dialogue with China regarding the yuan's exchange rate to address the European Union's massive goods trade deficit. In 2025, the EU's trade deficit with China reached approximately €359.8 billion, with every EU member state currently running a deficit with the country.

During a joint press conference, the leaders argued that the yuan is significantly undervalued and that China's industrial subsidies and overcapacity are distorting global trade. Merz suggested that if China considers its current exchange rate appropriate, it should allow for free convertibility to increase financial market openness. Macron emphasized that the current relationship between the yuan and the euro is unsustainable and must be addressed as a core pillar of trade discussions.

China has rejected these claims, with its Ministry of Foreign Affairs stating that the country does not manipulate its currency or undervalue it to gain competitive advantages. While the EU has launched a trade and investment consultation mechanism to tackle issues like intellectual property and export controls, the specific timeline for a roadmap to address currency and trade imbalances remains subject to differing official records, cited as either September 2026 or the end of 2026.