After convincing China to accept a cap on its hybrid car exports, a stream of top-level European finance and banking officials will descend on the Chinese capital in the coming months on a far trickier mission: persuading Beijing to stop holding down its currency to help save the bloc’s struggling industry.

In the week of November 23, top European Union economy officials led by director general Maarten Verwey will sit down in Beijing for a “macroeconomic dialogue” with their Chinese counterparts.

Plans are in the works, meanwhile, for a heavyweight trio – from the European Central Bank, Eurogroup and European Commission – to follow them there around the turn of the year, though no final date has been set, according to multiple people familiar with the planning.

This would be the first formal meeting in over a decade for a revived format with People’s Bank of China governor Pan Gongsheng and Finance Minister Lan Foan. The talks were kick-started on the margins of global financial meetings in Bangkok earlier this month.

The European delegation – comprising the three institutions responsible for managing the euro zone’s monetary policy and coordinating its economic policies – will likely be led by ECB President Christine Lagarde, along with EU economy chief Valdis Dombrovskis and Kyriakos Pierrakakis, president of the Eurogroup, a coalition of euro-using EU members.

It comes amid frenzied political interest in Europe about the perceived undervaluation of the Chinese yuan, which EU leaders say is making the country’s products cheaper for European buyers, contributing heavily to what is now commonly described as a “China shock 2.0” to European industry.

The Chinese currency is not freely floated, meaning its value is not entirely determined by market forces. For decades, this has led trading partners to suspect it is undervalued in order to boost the country’s exports, a vital engine for economic growth.

Estimates on the currency’s comparative valuation vary wildly. The International Monetary Fund suggested this year that it could be up to 21 per cent undervalued, while researchers at the Centre for European Reform put that figure at closer to 30 per cent.

Research by Chinese think tank CF40 also suggests the yuan has considerable room to strengthen in the coming years, based on its analysis of Chinese and American prices.

BusinessEurope, Brussels’ umbrella corporate lobby group, said last week that China “actively restrains the appreciation of the renminbi that a surplus of this size would normally trigger, keeping exports artificially competitive”. This factor “compounds direct state support”, the chamber said.

But both publicly and behind closed doors, Beijing has pushed back, pointing to official data showing that the yuan has strengthened by almost 10 per cent against the euro in 2026.

“Global imbalances cannot be resolved through exchange rate adjustments,” Pan said in an official PBOC account of the October 16 meeting, insisting there was “no straightforward relationship between exchange rate and current account”.

While the yuan has made gains in 2026, “any appreciation has really vanished in real terms” due to flat inflation and years of falling producer prices in China, which have run counter to rising prices elsewhere in the world, said Alicia Garcia-Herrero, chief Asia-Pacific economist at French bank Natixis.

Pan and Lan came to Bangkok extremely well-prepared, according to people familiar with the discussions. The PBOC governor is well-liked in EU circles and seen as a pragmatic operator. In recent weeks, he has met a flurry of senior European officials, including governors of the central banks of France and Sweden, as well as Emmanuel Bonne, French President Emmanuel Macron’s diplomatic adviser.

Nonetheless, in Bangkok Pan politely drew on a long paper published a week earlier by the PBOC that said the Chinese central bank did not agree with analysis that the yuan was manipulated to boost exports.

“China has no need or intent to gain competitive advantages through currency devaluation,” said the paper, published on October 8.

The European side, meanwhile, broached the issue carefully, lest it appeared that they were ganging up on China along with the United States. The delicate issue was couched in the diplomatic language of “global imbalances”, with acknowledgement that China’s underconsumption was an issue when placed alongside European underinvestment and American overspend.

There was an effort not to appear confrontational – instead officials highlighted how the parties could work together to address these imbalances, with currency being one issue to tackle. Ideally, the Europeans would like a glimpse of Beijing’s internal financial numbers to make fresh assessments on the yuan, even if that is seen as unlikely.

The dialogue “is aimed at enabling discussions on all relevant economic policies in a holistic manner, including global imbalances and their deep causes and the need for an orderly rebalancing in the interest of both sides and the global economy”, an ECB spokesperson said.

The Bangkok talks, then, did not achieve a breakthrough, but were seen as the gateway to technical discussions on the topic, in which technocrats will engage on the numbers, rather than getting bogged down in political bickering.

In Europe, however, the issue has boiled over into messy, mainstream political discourse. German media reports suggest that Chancellor Friedrich Merz’s dramatic pivot on China policy this month came directly from research linking an undervalued yuan to his country’s industry woes.

“Anyone who disrupts the functioning of the markets through unfair subsidies, overcapacities, aggressive pricing, or artificially undervalued currencies must expect a response,” Merz said at an event in Berlin last week.

In June, he pointed to the Plaza Accord as a model for today’s issues with manipulated currencies, referring to a 1985 pact that saw the US pressure Japan into accepting a sharp rise in the yen to curb its trade surplus.

Merz’s comments were anathema to Beijing’s official organs. In China, the accord is popularly seen to have crippled Japan’s export prowess, contributing to decades of perceived economic stagnation.

“China will not accept using exchange rates as a pretext for oppression, nor will it return to the old era of great powers coordinating the fate of a few countries. Today’s China is not the Japan of the past,” fumed Global Times, a tabloid under the official mouthpiece People’s Daily, in the days after Merz spoke.

European analysts believe, however, that allowing the yuan to strengthen would be a salve to Europe’s struggling manufacturing heartlands and help avert a potential broader trade war.

“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.”Garcia-Herrero from Natixis said expectations were being managed as to how much ground Beijing would give on this front, since “Chinese companies’ profits are small” and an appreciation “would only reduce them further”.

The economist suspects that for China, currency talks with Europe may have a different objective. The country is on a drive to globalise its currency and the buy-in of the EU would be a big help.

“I think renminbi internationalisation is also very important, and I do think China wants some support,” Garcia-Herrero said. “I think they want to exchange with the Europeans on a multipolar world of currencies.”

But she doubted whether Europe alone could convince Beijing to change course on currency intervention, saying such a mission would be “doomed” without US support. “This not something we can achieve without the dollar.”