European Central Bank President Christine Lagarde on Monday called for global leaders to address what she described as an undervaluation of the Chinese currency, arguing the issue belongs in a broader conversation about economic imbalances that could threaten the global economy.
Lagarde made the remarks against the backdrop of recent Group of Seven discussions in France, where members expressed concern about a set of imbalances that included not only China’s expanding trade surpluses but also persistent deficits in the United States and what were described as inadequate investment levels in Europe.
China has repeatedly denied that it manipulates its currency in order to secure trade advantages. That denial remains part of the public record as leaders and institutions debate possible drivers of global trade and price distortions.
Lagarde cited research from the International Monetary Fund that, when adjusting China’s nominal exchange rate to reflect differences in inflation rates across countries, the renminbi appeared to be undervalued by roughly 15-16%.
She linked the currency valuation concern to real-world consequences for industries across Europe. The comments highlighted how European firms have experienced mounting difficulty competing with Chinese producers in sectors where Europe once led, with high-end automobile makers specifically mentioned as an example. Part of this competitive pressure stems from lower-priced Chinese products, which can undercut European offerings on cost-sensitive dimensions.
Lagarde’s appeal to include currency valuation in multilateral discussions frames the renminbi issue as one of several interconnected distortions that were on the agenda at the G7 meeting. By situating the currency question alongside U.S. deficits and shortfalls in European investment, her remarks present a compact view of the range of imbalances that policymakers flagged.
The ECB president did not outline specific remedial steps in her statement. Instead, she emphasized the need for global leaders to consider the valuation of the Chinese currency as part of a wider effort to address the structural and cyclical imbalances that, in the view of G7 participants and referenced IMF analysis, carry implications for competition, trade flows and economic stability.