As the European Union tries to fight its record-high €1 billion deficit per day with China, the bloc’s leaders are increasingly pointing to the problem of currency manipulation, which they say Beijing is using to make products even cheaper on the EU market – which is already flooded with Chinese imports.
“An artificially low currency is an advantage for those who want to improve their economic competition positions,” German Chancellor Friedrich Merz said after the European Council summit on 19 June.
The matter of the Chinese currency and its management was also high on the agenda of last week’s G7 summit in France.
The signs are that this is a new front in Europe’s trade battle against Beijing. To understand why the devaluation of the yuan (or renminbi) matters, here are three things to know.
According to a report by the Haut Commissariat à la Stratégie au Plan, a French government advisory body, the undervaluation of the yuan is estimated at around 20-25 percent.
“While there is no universally recognised method for determining unequivocally whether a currency is significantly overvalued or undervalued, the assessment that the renminbi (RMB) is significantly undervalued is now widely shared, including among international institutions,” the report said.
In theory, China’s trade surpluses should naturally create demand for the yuan, leading to an appreciation of the currency, but it is not the case.
However, the devaluation of the yuan might not be the direct result of central bank intervention. Alicia Ferro Herrera, an expert at the Brussels-based think tank Bruegel, told Euronews that China prevents its currency from appreciating faster by not bringing all of its export revenues back to the mainland.
“They stay in Hong Kong and they are not converted into RMB,” she said.
The EU deficit with China hit a record-high €359.9 billion in 2025. That same year marked the first time that all EU member states had a trade deficit with Beijing, including Germany, the EU’s largest economy.
“This is simply not sustainable,” European Commission President Ursula von der Leyen said last Friday.
According to the Haut Commissariat au Plan report, the undervaluation of the yuan plays a large part in keeping Chinese products competitive; as things stand, they are assessed by EU industry to be around 30-40 percent cheaper than European equivalents.
However, Ferro Herrera pointed out that the inflation differential also plays a great part.
“My estimate is that the inflation differential and its accumulation in Europe since the invasion of Ukraine explains about three quarters of the loss in external competitiveness,” she said.
In his remarks last Friday, Merz suggested the EU begin dialogue with China on the currency issue.
“We have to talk about this topic with each other,” he said. “It is in the interest of both sides.”
The German chancellor cited the 1985 Plaza Agreement, which saw the US, Japan, West Germany, the UK and France agree to depreciate the US dollar against the Japanese yen and the Deutsche Mark. The goal was to head off a protectionist turn from the US as its trade deficit deepened.
Merz also referred to the European Monetary System, which before the adoption of the euro relied on exchange-rate bands to limit currency fluctuations.
“That was a system where countries could coordinate through exchange-rate corridors,” he said.
Conversely, Ferro Herrera points out that the US did not push for any such negotiation when economic imbalances were discussed during the G7 last week.
In her view, Europe should monitor China’s export prices for major sector-by-sector deviations, since this is an important sign of overcapacity, as negative price growth occurs when goods cannot be sold.
Dilok Klaisataporn
Japan’s trade deficit significantly decreased to JPY 378.7 billion in May 2026, down from JPY 662.5 billion a year earlier and performing better than the market’s expected JPY 564.6 billion shortfall, the contraction was driven by exports expanding faster than imports.
MILWAUKEE — Something about American Family Field in the regular season disagrees with the Dodgers.
They began this road trip with a pair of statement series, sweeping the Angels and edging out the Padres. But their momentum came to a grinding halt when they fell 5-1 to the Brewers on Friday in Milwaukee.
The loss brought back memories of last year, when the Brewers swept the regular-season series, before the Dodgers swept them in the National League Championship Series.
“I don’t think people appreciate how well this team plays baseball,” manager Dave Roberts said before the game. “There’s not a lot of fanfare as far as name recognition. But the way [Brewers manager] Pat Murphy gets these guys to play, it’s a fun brand of baseball.
“They don’t strike out much. They put the ball in play. They bunt, they hit and run, they steal bases, they can pitch. It’s a good matchup. Last year, during the regular season, we couldn’t beat these guys once, so I expect us to play better baseball this year.”
That brand of baseball was a bit of a nightmare for Dodgers starter Justin Wrobleski in the first inning. The Brewers batted around en route to a five-run rally. Five of their six hits were singles. The one exception was William Contreras’ three-run homer.
The next inning, they tacked on another run when Contreras singled and then scored when Andrew Vaughn’s double ricocheted off the wall in the right-field gap.
Wrobleski turned around his outing by blanking the Brewers for the next three innings, but the deficit proved to be too steep for the Dodgers to overcome.
Wrobleski has only given up more than two runs in one other start this season. That one also featured one high-scoring inning and a mid-game adjustment.
The Dodgers’ offense, in contrast to the Brewers’, didn’t record a hit off Brewers starter Logan Henderson until the fourth inning. He faced the minimum through the first three innings — a leadoff walk erased when Shohei Ohtani was caught stealing.
Finally in the fourth, Ohtani worked a 2-2 count and lined a hung change-up into right field. Then Freddie Freeman and Andy Pages drew walks to load the bases with two outs. But the Dodgers failed to capitalize.
The Dodgers again threatened after the Brewers replaced Henderson with left-handed reliever Shane Drohan, drawing a pair of walks to put runners on first and second. But the inning ended with a long flyout from Max Muncy, just a few feet shy of a base hit.
They needed some help from the Brewers’ defense to finally put a run on the board. Third baseman Luis Rengifo mishandled a ground ball to let Teoscar Hernández reach base in the seventh inning. A single from Dalton Rushing and a fly out from Miguel Rojas moved him to third. Ohtani delivered the sacrifice fly.
The Dodgers’ Max Muncy leaves the game after being hit by a pitch during the eighth inning against the Brewers at American Family Field on Friday in Milwaukee, Wisc.
(Patrick McDermott / Getty Images)
The Dodgers may have to deal with additional repercussions. Muncy exited in the top of the eighth inning after being hit in the hand/wrist by a pitch.
Muncy shouted as soon as the 95.5-mph sinker struck him, and he appeared to cradle his right arm. After consulting with an athletic trainer, he touched first base and was replaced by Santiago Espinal.
The severity of Muncy’s injury was not immediately clear.
The MiLB transaction log Friday showed that former Dodger Chris Taylor has retired after a 12-year major-league career. He spent a decade with the Dodgers, was named the 2017 NLCS MVP, won two World Series, and was an All-Star in 2021.