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European Central Bank’s President Lagarde urges talks on yuan undervaluation
China has denied it manipulates its currency for trade advantage but its surging trade surpluses are worrying leaders of the G7 nations
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European Central Bank President Christine Lagarde on Monday urged global leaders to discuss undervaluation of the Chinese currency as a facet of the imbalances endangering the global economy.
China has consistently denied that it manipulates its currency for trade advantage but its surging trade surpluses are one of several macroeconomic mismatches worrying leaders of the Group of Seven (G7) nations who met last week in France, along with chronic US deficits and Europe’s underinvestment.
Europe has struggled to compete with China in sectors it used to dominate, such as high-end cars, partly due to Chinese goods being cheaper.
Lagarde cited International Monetary Fund research indicating that the Chinese currency, also known as renminbi, was 15 per cent to 16 per cent undervalued when its nominal exchange rate was adjusted for international differences in inflation.
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