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Reuters
an hour ago
- Business
- Reuters
China's yuan undervaluation fuels euro zone trade deficit, German study shows
BERLIN, July 23 (Reuters) - European companies are facing increasing pressure due to China's alleged currency manipulation to keep its yuan weak, a study by the German Economic Institute showed, as EU leaders prepared for a summit in Beijing aimed at navigating trade disputes. The yuan-euro exchange rate has remained stable in recent years despite significant shifts in cost relations between Europe and China, suggesting likely currency manipulation by the central bank, said Juergen Matthes, author of the study by the Institute (IW), which was seen by Reuters. Extremely low prices mean more European companies are sourcing intermediate goods from China, contributing to deindustrialisation on the continent, he said, urging the EU to take action. "The artificially low costs in China, driven by yuan undervaluation, are simply too attractive," Matthes said. Those companies that did not source their intermediate goods from China would lose market share to rivals who "fully exploit China's price advantages." The Chinese central bank did not immediately respond to a request for comment. EU leaders arrive in Beijing on Thursday for a top-level summit with China as both sides seek to navigate trade disputes amid broader global trade uncertainties. In response to allegations of currency manipulation, China has in the past said it was committed to implementing a managed floating exchange rate regime, based on market supply and demand. The study comes as European companies are under pressure from a surge in Chinese exports diverted from the United States and an appreciation of the euro against the dollar due to U.S. President Donald Trump's trade policies, economists say. Producer prices in Germany and the euro zone have surged since 2020 due to supply chain disruptions and the energy crisis, whereas prices in China have hardly increased. Yet, the exchange rate has barely moved, leading to a real appreciation of the euro against the yuan of over 40% between early 2020 and spring 2025, and deepening the euro zone trade deficit with China, the study shows. Normally, higher import purchases from the euro zone would boost the yuan as it drives up demand for the currency, but that has not been the case, said Matthes. President Trump labeled China a currency manipulator during his first term. The Treasury Department then dropped the designation in January 2020 as Chinese officials arrived in Washington to sign a trade deal with the U.S. Last month, the U.S. simply issued a stern warning to China, saying it stood out among key trading partners "in its lack of transparency around its exchange rate policies and practices." China said it upheld "multilateralism and respects multilateral consensus," was committed to keeping the renminbi exchange rate stable, and would not "engage in competitive currency devaluation." Matthes, however, said the Chinese central bank's behavior was "highly non-transparent." When adjusting the yuan exchange rate, which is only allowed to fluctuate within a narrow band, the dollar relationship plays a central role, as does a currency basket, he said. "But how this is done, exactly, no one outside China knows,' he said, and the euro is "collateral damage."
Bloomberg
2 days ago
- Business
- Bloomberg
EU Targeted by China for Retaliation Over Bank Sanctions
The European Union was put on notice that Beijing plans to retaliate against the bloc's newest sanctions. China's Ministry of Commerce said that last week's EU penalties against two banks and five companies seriously harmed trade, economic and financial ties. China issued the warning ahead of a summit scheduled with EU leaders later this week in Beijing. The two trading giants had sought to improve commercial ties as a buffer against US President Donald Trumps import duties. But that initial calculus seems to have changed as the EU also seeks to ramp up pressure against entities violating sanctions against Russia.
Yahoo
14-07-2025
- Business
- Yahoo
US stock futures lower after Trump announces 30% tariff on Mexico, EU
U.S. stock futures are lower after President Donald Trump further escalated trade tensions. Over the weekend, Trump announced a 30% tariff on goods from the European Union and Mexico, starting Aug. 1. Mexico and EU leaders said they would continue to negotiate this month before that date. The EU is now preparing to step up its engagement with other countries hit by Trump's tariffs, according to people familiar with the matter, according to Bloomberg. Other reports say the EU is considering retaliatory tariffs against the U.S. if no deal is reached and U.S. levies are enacted. At 6:15 a.m. ET, futures linked to the blue-chip Dow fell -0.30%, while broad S&P 500 futures slipped -0.28% and tech-heavy Nasdaq futures fell 0.30%. Bitcoin rallied to a record high for a fourth time in the past week. The digital unit jumped to $119,300 ahead of "Crypto Week," which begins July 14. This week, lawmakers will debate three key bills aimed at providing clear regulatory frameworks for digital assets, stablecoins, and blockchain technologies. Later this week, investors will get aother round of inflation data to comb through for signs Trump's tariffs are affecting consumer prices and the economy. Investors will also have to contend with increasing pressure on Federal Reserve Chairman Jerome Powell. On Sunday, National Economic Council Director Kevin Hassett said Trump can fire Fed Chair Jerome Powell 'if there's cause.' Office of Management and Budget Director Russell Vought has said Powell 'has grossly mismanaged the Fed' and suggested he had misled Congress about a pricey and 'ostentatious' renovation of the central bank's headquarters. He is vowing a probe into this. Trump said over the weekend if Powell stepped down, that would be a 'good thing.' Earnings season is about to ramp up, with large banks like JP Morgan, Bank of America and Goldman Sachs set to report this week. Tesla plans to poll shareholders on whether to invest in xAI, chief executive Elon Musk said after the Wall Street Journal reported SpaceX will invest $2 billion into the Grok chatbot developer. Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at mjlee@ and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday. This article originally appeared on USA TODAY: US stock futures lower after Trump announces 30% tariff on Mexico, EU Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
CNA
06-05-2025
- Business
- CNA
China and EU agree to fully lift restrictions on mutual exchanges
China and the European Union have agreed to completely lift restrictions on mutual exchanges, as both sides mark 50 years of diplomatic relations. Beijing has also extended a welcome to visits by top EU leaders at a time it deems appropriate. China is looking to present itself as a reliable partner in a global trade landscape upended by US tariffs. Tan Yew Guan reports from Shanghai and Ross Cullen reports from Paris.
