ECB’s Lagarde calls for talks on yuan undervaluation

EU Sets June 29 Brussels Talks With China on Trade Imbalances

European Trade Commissioner Maros Sefcovic will host Chinese Commerce Minister Wang Wentao in Brussels on June 29-30 for what officials have described as “crunch talks” on the bloc’s widening trade deficit with China, as pressure mounts from EU leaders and the European Central Bank for concrete action on economic imbalances.

Summit Mandate

The meeting follows the European Council summit on June 18-19, where EU leaders instructed the European Commission to “develop and ultimately enhance the toolbox in trade defense” and deliver results from dialogue with major trading partners. European Council President Antonio Costa labeled the bloc’s roughly €1 billion daily trade deficit with China “simply unsustainable,” adding: “We cannot keep raising this issue without tangible outcomes. Unfortunately, China has not delivered thus far”.reuters

China’s goods trade surplus with the EU hit €360.6 billion in 2025, a 15% increase from the previous year, with a further 10% rise in the first four months of 2026. Commission President Ursula von der Leyen announced plans for a new diversification instrument that would require EU companies in sensitive sectors to reduce reliance on single suppliers, though she said the law might prove unnecessary if businesses accelerated their own de-risking efforts.euronews

New Trade Tools Under Development

The Commission is preparing a broader package of trade defense measures expected in the third quarter of 2026, potentially including sector-specific safeguards for chemicals and green technology, faster anti-dumping procedures, and tighter procurement rules. France has pushed for a mechanism inspired by the U.S. Section 301 trade authority, an idea that has gained political traction among member states.reuters

Sefcovic said after preliminary exchanges with Chinese envoy Li Chenggang in Paris that the June talks are intended to deliver “concrete outcomes”. The South China Morning Post first reported the June 29-30 dates in May.scmp

Currency Dimension

On Monday, ECB President Christine Lagarde added a new dimension to the dispute, calling on world leaders to discuss the undervaluation of the Chinese yuan. She cited IMF research indicating the renminbi is 15-16% undervalued when adjusted for inflation differentials. “That reflects the current reality, which entirely justifies the need for ongoing discussions regarding excessive imbalances, including currency issues, among G7 leaders and beyond,” Lagarde said at a Brussels event. She dismissed comparisons to a new Plaza Accord, noting the 1985 agreement was struck under “different circumstances”.reuters

Her remarks echoed German Chancellor Friedrich Merz’s earlier call for global exchange-rate discussions as part of the EU’s effort to rebalance trade with Beijing.bloomberg