China’s central bank rejects claims the yuan is undervalued as EU talks open in Beijing

The People’s Bank of China released a policy statement titled Policy Position on the Renminbi Exchange Rate, issued as a formal document on Thursday along with an English translation^3,4. In the lengthy statement the central bank rejected claims that China keeps the yuan artificially weak to gain a trade advantage^1,2. In the policy paper it said Beijing has never engaged in competitive devaluation to boost exports⁸.

The bank said China lets the market play a decisive role in exchange rate formation and that it has no need or intention to weaken the yuan for a trade edge⁶. It stressed that the country operates a managed floating regime⁵. One account described the article as a rare and concentrated statement that systematically laid out seven core elements of the bank’s stance⁹. The South China Morning Post reported the bank as slamming currency manipulation claims, quoting it on the practice of attributing a decline in industrial competitiveness, weakened fiscal discipline and complicated structural issues to China’s currency⁷.

Why it matters to investors

The timing is the message. The statement landed as EU trade chief Šefčovič touched down in Beijing for a two-day trip, with talks described as entering a critical phase^10,11. Europe has been stepping up pressure over its trade surplus with China, and the central bank chose that moment to put its currency position on the record in English^1,2,3.

The second element is what each side wants. The bloc admits it has fallen behind in AI and wants Beijing to lift export controls on metals and minerals, including rare earths¹¹. Brussels is also preparing for EU leaders to gather next week, which gives the Beijing meetings a deadline¹⁰. For investors, that pairs a currency question with a critical-minerals question in the same negotiation.

What to watch

The first test is whether the EU treats the currency statement as an answer or as a sticking point. The bank’s argument is that Europe’s industrial problems come from competitiveness, fiscal discipline and structural issues rather than the renminbi, which is a direct rejection of the premise behind European trade measures^7,8.

The second is what follows the Beijing visit when EU leaders meet in Brussels¹⁰. Export controls on metals and minerals are the concrete deliverable Europe is seeking, and the central bank’s paper does not address them¹¹. A managed floating regime that lets the market play a decisive role is, on Beijing’s own description, compatible with official management, so the statement sets the frame for the dispute rather than settling it^5,6.