The yuan has become a flashpoint in trade relations between China and the EU. Many EU policymakers and economists argue that the currency is undervalued, contributing to the bloc’s deepening trade deficit with the East Asian nation.

That imbalance averaged about $1.1 billion a day in June, underscoring Locate China’s impact on EU trade flows.

EU leaders warn that an undervalued yuan can distort market prices, giving Chinese exporters an unfair advantage and widening the EU’s import surplus.

The debate highlights a broader tension as European policymakers seek to protect domestic industries while maintaining a stable partnership with China.