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China pushed back against foreign criticism of its exchange-rate policy on Thursday, saying it has never pursued competitive depreciation, as European policymakers call for a stronger yuan to help curb China's record trade surplus and export surge.As China's trade surplus swells, European leaders have intensified calls for a stronger yuan, fearing a "China Shock 2.0" from a fresh wave of Chinese exports.In a lengthy policy statement, the People's Bank of China (PBoC) rejected claims that China keeps the yuan artificially weak to gain a trade advantage, as the EU's trade chief Maros Sefcovic is in Beijing to discuss narrowing the bloc's trade deficit with China."China neither needs nor intends to obtain a trade-competitive advantage through exchange-rate depreciation, and has never engaged in competitive currency depreciation," the central bank said. "Attributing a decline in domestic industrial competitiveness, the weakening of fiscal and financial discipline and complex structural problems simply to the exchange rates of other nations amounts to evading and shirking one's own responsibility for making necessary adjustments."China posted a record trade surplus of nearly $1.2tn in 2025, equivalent to about 6% of GDP, with analysts expecting exports of AI-related and other advanced technology products to help keep the surplus elevated this year.China's trade strength stems from the global competitiveness of its industries, the central bank said, arguing that countries with large trade surpluses have historically been those with strong manufacturing sectors.European Central Bank President Christine Lagarde in June urged global leaders to discuss undervaluation of the Chinese currency as a facet of the imbalances endangering the global economy. The bloc is concerned about its trade imbalance with China, which reached €360.6bn ($404bn) in 2025, according to EU data, up 15% from the previous year.German Chancellor Friedrich Merz has said the yuan is undervalued by 25% to 30% and called for a dialogue with China on monetary policy.Goldman Sachs said in August that the yuan is undervalued by at least 20% on some of its valuation models, arguing that a stronger currency would help narrow China's outsized trade and current-account surpluses and ease protectionist pressure from trading partners.The PBoC said exchange rates reflect multiple economic and financial factors, rejecting claims that isolated model estimates prove the yuan is undervalued.The yuan has climbed about 4% against the dollar this year despite a widening US-China yield gap.The PBoC said the yuan has appreciated about 23% against the dollar since China's 2005 exchange-rate reform, strengthening from 8.27 yuan per dollar to around 6.7 currently.It warned that the yuan's outlook remains uncertain, with forces for both appreciation and depreciation shaping its trajectory.China lets the market play a decisive role in exchange-rate formation, the central bank said, adding that it does not preset exchange rate target levels or intervene in long-term exchange rate trends."The People's Bank of China does not preset an exchange-rate target level, does not intervene in the long-term trend of the exchange rate, and maintains exchange-rate flexibility and two-way movement," it said.China will report additional foreign exchange-related data to the International Monetary Fund starting from 2027, the central bank said. 

China's central bank pledged to adjust monetary policy tools ‌in a timely manner and facilitate panda ​bond issuance, a ‌statement showed on Sunday. The People's Bank ‌of ⁠China (PBoC) will ‌continue to implement an appropriately ‌loose monetary policy and maintain ample liquidity, according ⁠to the readout of a work meeting on Saturday to map out the second half of the year.The PBoC statement pledged to "steadily promote the high-level opening of the financial market... advance domestic and international infrastructure cooperation, ​and enrich liquidity management and risk hedging tools." It would "continue to financially support debt risk resolution of local government financing ‌vehicles, and promote their market-oriented ⁠transformation," it ​added. As well as supporting more overseas ​institutions issuing yuan-denominated bonds, known as panda bonds, the central bank would help Shanghai enhance cross-border finance and offshore financial services, and consolidate Hong Kong's position as an offshore yuan hub, the statement said.The meeting, headed by PBoC Governor Pan Gongsheng, followed a call by the Communist Party's Politburo on ‌Thursday to accelerate the ‌pace of fiscal ⁠spending on already budgeted infrastructure projects in the ⁠remainder of the ⁠year. Data released last month showed economic growth at 4.3% in the second quarter, its slowest in more than three years and missing the lower end of a full-year target of 4.5% ​to 5.0%. The Politburo, a top party decision-making body, acknowledged "difficulties and challenges facing the economy" at its meeting, the official Xinhua news agency said. China must "accelerate the pace of fiscal expenditure" and enhance the flexibility and forward-lookingness of monetary policy, a summary of the discussion showed.

China’s central bank reaffirmed its supportive monetary policy stance while signalling continued caution toward aggressive stimulus, reinforcing a shift toward securing long-term stability over immediate fixes.The People’s Bank of China (PBoC) vowed to guide borrowing costs to continue hovering at a low level, according to a Wednesday statement following its fourth-quarter monetary policy committee meeting. The bank repeated a pledge to step up “cross-cyclical” policies, a phrase suggesting it aims to look beyond short-term volatility and avoid excessive stimulus that could create structural imbalances.The statement didn’t mention a reduction in interest rates or to the reserve requirement ratio, which determines how much cash banks must keep in reserves, while the PBoC pledged to make use of multiple policy tools. That suggests the central bank is cautious about taking those big easing steps, even after a readout following a key annual economic work conference included a reference to those measures earlier this month.The language suggests “a preference toward a reactive rather than proactive approach to easing,” Goldman Sachs Group Inc economist Xinquan Chen said in a note Thursday. Changes in the language “point to a more cautious and flexible approach to monetary policy easing”, he said.This measured approach comes despite deepening weakness in domestic demand, with retail sales last month expanding at the lowest pace since the crash caused by Covid. Fixed-asset investment is also on track for its first annual decline in data going back to 1998, after a crash made worse by a drought in funding for infrastructure projects.The committee said it will “grasp the strength, pace and timing” of policy implementation based on evolving domestic and overseas conditions. The PBoC also reiterated its commitment to maintaining the yuan’s basic stability at a reasonable and balanced level to guard against overshooting risks.The PBoC has adopted a cautious approach this year, frequently disappointing economists who had anticipated more aggressive interest rate cuts. This restraint reflects the central bank’s deeper concerns over protecting shrinking bank margins and preserving policy space for future downturns.While the meeting readout mentioned maintaining “ample” liquidity, the focus on “quality and efficiency” over raw volume suggests that any further easing will be mostly targeted.The PBoC will likely cut the RRR by 50 basis points in the first quarter to maintain ample liquidity and ensure government borrowing costs stay low, economists at China Galaxy Securities Co wrote in a report on Thursday.While it may cut the policy interest rate by 10 to 20 basis points in 2026, any reduction may only be triggered by an increase in economic pressure, such as a deterioration in the US-China relationship or worsening unemployment, they said.