• China's central bank governor defends the country's large trade surplus, saying it is not a deliberate policy goal.
  • The remarks come amid rising G20 pressure and U.S. Treasury Secretary Scott Bessent's call for rebalancing.
  • Pan emphasizes domestic demand expansion and warns against protectionism, while the yuan's appreciation pace remains a key focus.

At the G20 finance ministers and central-bank governors meeting in Asheville, PBOC Governor Pan Gongsheng pushed back against criticism that China is relying on exports to sustain growth. "China does not deliberately pursue a trade surplus," Pan said, according to officials familiar with the discussions. He stressed that Beijing is committed to expanding domestic demand and high-level opening, and will maintain an "appropriately accommodative" monetary policy to support this shift.

The remarks directly address concerns voiced by Bessent and others that China's widening external surplus contributes to global imbalances. Pan countered that protectionism, trade frictions, and the expanded use of "national security" rationales have aggravated these imbalances, calling for multilateral cooperation and structural reforms on both sides. Deficit economies should reduce fiscal deficits and raise saving, while surplus economies should moderately boost consumption and investment, he argued.

China's official goods-and-services surplus reached RMB 619.8 billion ($91.2 billion) in July alone, according to the State Administration of Foreign Exchange. That strength has put upward pressure on the yuan, which has climbed nearly 9% against the dollar over roughly 20 months. Yet market participants suspect the PBOC has been constraining the pace of appreciation through its daily fixing mechanism and state-bank dollar purchases, a Reuters poll shows a median year-end forecast of 6.68 yuan per dollar versus around 6.72 on August 31.

Analysts see a delicate balancing act: A stronger yuan would help rebalance the economy by making imports cheaper and exports less competitive, but could hurt exporters and employment at a time when domestic demand is still soft. Exports have been a bright spot in an otherwise unbalanced economy, with consumption struggling to gain traction. The PBOC's policy stance, as outlined in the first half of 2026, shows M2 growing 8.0% year over year and new corporate loans averaging around 3.0% in June.

Political pressure is not just coming from Washington. German Chancellor Friedrich Merz has voiced concerns about yuan undervaluation, reflecting European manufacturers' fears of Chinese competition. Pan's message of multilateralism is also aimed at such critics, insisting that unilateral tariffs and restrictions are part of the problem, not the solution.

For now, the PBOC is likely to prioritize stability over rapid currency appreciation, according to analysts cited by Reuters. They expect only modest yuan gains in the coming year. But with the surplus showing no signs of shrinking, friction with trading partners may escalate, and the dispute could spill into tariffs, investment screening, and other trade defenses.

This article was updated to clarify the timing of Pan's remarks and to include additional context on EU concerns.