IMF says yuan is 16% undervalued
The IMF just found that China's currency, the yuan, is about 16% undervalued.
This means Chinese goods are cheaper for other countries to buy, while imports into China get pricier.
The main reasons? Weak spending at home and low inflation in China have pushed the currency down.
Current-account surplus and industrial policy costs
China's current-account surplus—which includes its trade balance plus income on foreign assets and transfers—was 3.7% of GDP in 2025, much higher than what's considered normal.
The IMF also pointed out that China spends a lot on industrial policies—about 4% of GDP (figure/year not given in the source)—compared with about 1.5% in the EU (figure/year not given in the source).
IMF calls for more flexible exchange rates
The IMF is urging "greater exchange rate flexibility" to help balance things out.
Despite some risks like weak demand at home and a slower global economy, the source does not provide a 4.5% growth projection for 2026.