Leaders of the Group of Seven (G7) countries convened in France this month with the prospect of presenting a unified stance on China’s growing economic influence. However, the summit’s outcome fell short of expectations, overshadowed by ongoing conflicts in Iran and Ukraine and the unpredictable approach of U.S. President Donald Trump. The G7 issued statements encouraging cooperation on reducing reliance on foreign critical minerals and promoting “balanced, durable and resilient growth” to address “global imbalances,” but stopped short of directly naming China or endorsing a coordinated policy against Beijing’s trade practices.

Within the European Union, a consensus appears to be emerging that China is the primary source of economic difficulties for the bloc. Citing data from 2025, the EU has pointed to China’s trade surplus of US$1.19 trillion and a sharp 17.3% rise in Chinese exports to Germany in the first five months of 2026, while EU exports to China have increased by only 1.5%. European officials argue this discrepancy signals unfair currency manipulation and overcapacity in China’s manufacturing sectors.

German Chancellor Friedrich Merz has been vocal in advocating a harder line, claiming the Chinese yuan is undervalued by as much as 30%, a figure significantly higher than estimates from the International Monetary Fund, which puts the undervaluation at around 15-16%. Merz has suggested an approach similar to the 1985 Plaza Accord, which pressured Japan and West Germany to appreciate their currencies to rebalance trade with the United States. However, that agreement led to a severe asset bubble and prolonged economic stagnation in Japan, serving as a cautionary example from an Asian perspective.

European Commission President Ursula von der Leyen supported Merz’s call, describing the 45% increase in Chinese exports to the EU last year as “simply not sustainable.” She welcomed stronger unity among member states to formulate a European response. Critics, however, argue that Europe’s difficulties stem largely from self-inflicted structural changes, including the curtailing of cheap Russian energy supplies and a retreat from industrial competitiveness in cutting-edge sectors such as electric vehicles, batteries, solar power, wind turbines, and advanced materials—areas in which China has strategically invested and come to dominate.

Some observers viewed calls for protectionism and accusations of dumping as lacking context. In a private discussion at the summit, Canadian Prime Minister Mark Carney and President Trump reportedly concurred that allowing select Chinese electric vehicles into Canada at reduced tariff rates was beneficial. They underscored that consumer preference, rather than forced imports, drives market dynamics. The distinction between innovation-led competition and accusations of unfair trade practices remains a central point of contention.

European Central Bank President Christine Lagarde cautioned that the 1985 Plaza Accord took place under very different global circumstances. She emphasized that any future negotiations on trade imbalances and currency values would require China’s full participation. Observers note that Europe’s diminished economic leverage compared to previous decades makes aggressive strategies less effective. Analysts suggest that a more pragmatic path forward would involve pursuing mutually acceptable trade agreements with China rather than escalating confrontations.