The German Economic Institute accuses China of artificially depreciating the yuan
Photo: EPA

European companies are under increasing pressure due to China's alleged manipulation of the national currency. This is stated in a study by the German Economic Institute (IW), writes Reuters.

Jürgen Mattes, author of the study, notes that the RMB/euro exchange rate has remained stable in recent years despite significant changes in the cost of goods in China and Europe.

This, in his opinion, indicates that the People's Bank of China may have intervened to artificially depreciate the currency.

"The artificially low production costs in China caused by the undervalued yuan are too attractive," Matthes emphasizes.

Because of this, European manufacturers are increasingly purchasing components from China, which contributes to deindustrialization on the continent. Those companies that try to maintain local supply chains are losing competitiveness, Matthes emphasized.

According to the study, from 2020 to the spring of 2025, the real exchange rate of the euro against the yuan increased by more than 40%. This happened amid the energy crisis and inflation in the EU, while prices in China remained stable.

At the same time, the exchange rate remained virtually unchanged, which only widened the EU's trade deficit with China.

China officially denies currency manipulation and says it maintains a "managed float" based on market supply and demand.