EU plans high-level China currency talks as fears of new trade shock mount

“If it’s a sizeable revaluation, of course it will [move the needle],” said Sander Tordoir, chief economist at the Centre for European Reform and co-author of a paper that reportedly helped convince Merz of the need to change tack on China.

“Most models would suggest that a 10 per cent real effective exchange rate change shifts real net exports by 1.5 per cent of GDP on average,” he said.

“Beijing faces a real choice here: either revalue the currency to lower pressure from trading partners ranging from the EU to India or accept that said partners will ratchet up the trade ramparts.”