Chinese Yuan: Undervaluation and export gains questioned – Commerzbank

Commerzbank’s Volkmar Baur has cast doubt on recent internal analysis regarding China’s yuan undervaluation and its impact on export gains. Baur contends that China’s exchange-rate management and gold purchases indicate a deliberate weakening of the currency. He points to China’s substantial export and trade surplus growth since 2019, highlighting a roughly 20% real exchange-rate advantage that is unlikely to be neutral for global trade flows.

From 2019 to the end of 2025, China’s real exports surged by 47%, while global trade grew by only 15%. Consequently, China has gained market share worldwide. During this period, China’s trade surplus expanded from approximately USD 400 billion to USD 1,180 billion. When focusing solely on manufactured goods, China’s trade surplus in 2025 reached 1.75% of global gross domestic product—outpacing top exporters like Germany and Japan, who combined did not achieve this figure in their best years.

Unlike the D-Mark or the Japanese yen, which experienced sharp appreciation against the US dollar in the late 1980s, China’s yuan depreciated by about 10% on a trade-weighted basis between 2019 and 2025 and as much as 22% against the euro. While not all of these changes can be attributed to the undervalued yuan, Baur finds it challenging to argue that a 20% price difference has no effect on supply and demand in economics.