Merz says G7 advanced talks on China imbalance

German Chancellor Friedrich Merz announced that the G7 summit in Évian, France, has achieved progress in collectively assessing the monetary policy issues that create economic imbalances with China. However, he cautioned that substantial work remains.

Merz explained that the global economy faces a significant disadvantage due to China's currency being undervalued by an estimated 25% to 30% compared to other economic blocs. He emphasized the need for open discussion on this matter within the G7 framework.

"We face an economy with an undervalued currency to a magnitude of between 25 and 30% with respect to other economic spaces," Merz told German media on the sidelines of the summit. He added that this situation causes a "massive disadvantage" that requires attention.

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We face an economy with an undervalued currency to a magnitude of between 25 and 30% with respect to other economic spaces.

While the G7 nations have agreed to address the issue, they have not yet reached a consensus on the specific format for these discussions. Merz stressed that monetary policy imbalances are a component of broader geoeconomic imbalances. He initiated the discussion on this topic at the summit and later conferred with U.S. President Donald Trump.

Merz noted that Trump shares this perspective, as the U.S. is also affected. "He also sees it this way, because the U.S. is also affected. And in this sense, here too, there has once again been a conclusive assessment of a situation that will require much more joint additional work from us," the chancellor stated. The discussions come as China, under President Xi Jinping, aims to strengthen the yuan's global role, though it remains pegged to the dollar to prevent excessive appreciation that could harm exports.

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He also sees it this way, because the U.S. is also affected. And in this sense, here too, there has once again been a conclusive assessment of a situation that will require much more joint additional work from us.