Full Breakdown
Yuan Valuation Dispute Fuels China’s International Push
6/20/2026, 12:05:58 PM
Core Event: German criticism meets China’s yuan expansion
Chancellor Friedrich Merz said the yuan is “undervalued by 30 per cent”, above the IMF’s 16 per cent estimate. At the same time, People’s Bank of China added 26 banks to its cross-border digital-yuan network, and African traders are using yuan. Iron-ore futures on Dalian exchange slipped to 762 yuan per ton as demand eases.
Background & Context
Merz invoked the 1985 Plaza Accords as a model for coordinated currency action. China has expanded the Cross-border Interbank Payment System (CIPS) and a digital-yuan platform that logged over US$55 billion in transactions by January, to reduce reliance on SWIFT, with yuan’s share at 2.85 % in April.
Data Snapshot
Undervaluation claim: 30 % vs IMF 16 %; China-Africa trade 2025: $348.05 billion, Chinese exports $225.03 billion. Digital-yuan network includes 26 banks with branches in Brazil, Qatar, Thailand, Hong Kong, Macau and Standard Chartered China, processing >US$55 billion; iron-ore futures 762 yuan/ton, down 0.85 %.
Official Statements
Merz said “subsidising overcapacities” and a “currency that isn’t convertible freely … is not acceptable”. Lu Jing said “an efficient, convenient and compliant cross-border payment experience will enhance the international use of yuan”. Birru Sanghrajka said yuan-denominated payments are “becoming more visible in trade finance flows, even if they are not yet at a scale to challenge existing reserve currencies”. Ives Yang noted “current activity is largely driven by import-export transactions between China and African markets”.
Criticism & Opposition
European officials, led by Merz, argue that an undervalued yuan and Chinese subsidies distort competition and threaten EU manufacturers, echoing concerns about China’s overcapacity.
On-the-Ground
Standard Bank processed about $500 million in yuan-settled trades after joining CIPS; Mozambique is weighing a debt swap to yuan, and exporters in Kenya, South Africa and Nigeria receive yuan for avocado oil, apples and bone pellets.
Conflicting Reports
Sources differ on the yuan’s undervaluation (30 % vs 16 %); data on digital-yuan’s impact on global trade remain limited.
Verbatim Quotes
- “An efficient, convenient and compliant cross-border payment experience will further enhance the international use of yuan,” — Lu Jing, CEO, Standard Chartered China
What’s Next
Merz cited the Plaza Accords as a template for coordinated currency action, suggesting similar measures could be discussed. The People’s Bank of China signalled further digital-yuan network expansion, and Standard Bank’s early $500 million volume suggests more institutional uptake. Mozambique’s contemplation of a yuan-denominated debt swap hints at broader African financing shifts.
