On June 11, 2025, Christine Lagarde, President of the European Central Bank (ECB), visited Beijing and delivered a speech titled "Preserving Global Cooperation in an Increasingly Fragmented World" at the People's Bank of China (PBOC). The speech focused on the issue of global trade imbalances, urging countries to collaborate and adjust policies to maintain global economic stability and prosperity.

Lagarde Emphasizes Shared Responsibility for Trade Imbalances

During her speech, Lagarde highlighted that addressing global trade imbalances requires a shared responsibility among all countries. She argued that policies leading to excess capacity or demand imbalances must be adjusted to prevent trade barriers and retaliatory measures, which could erode global prosperity. Lagarde called for a cooperative approach between surplus and deficit countries to resolve trade tensions.

She specifically pointed to China's industrial policies as a significant factor contributing to global trade imbalances. Since 2014, there has been a more than twofold increase in global subsidies and interventions that distort trade. Critics have long argued that China's extensive use of subsidies, particularly in export-oriented production, has provided Chinese firms with an unfair competitive advantage, squeezing out producers from other regions.

However, Lagarde also noted that China is not the only country employing subsidies. Other emerging market economies are adopting similar measures. She emphasized that all countries should review their policies to avoid escalating trade tensions.

Urging Joint Responsibility Between the US and China

Lagarde mentioned that one of the reasons behind the US tariffs on Chinese goods is the perceived impact of China's industrial policies on the US trade deficit. She warned that the US and Europe will not allow China to undermine their domestic industries through subsidized exports. She highlighted that, in the context of national security and lessons learned from the pandemic, few countries are willing to rely on others for strategic industries, especially when faced with unfair trade practices.

Lagarde stressed that the US and China, as the world's largest economies, must jointly take responsibility for reducing the significant trade imbalances that could lead to a global economic collapse. She cautioned against "coercive" trade policies, which she said could not resolve financial imbalances and would likely cause substantial economic damage. She cited historical trade crises in the 20th century as examples, calling for dialogue and cooperation rather than unilateral policy adjustments to address global trade frictions.

High-Level Attendance from the PBOC

The event was attended by senior officials from the PBOC. PBOC Governor Pan Gongsheng delivered a welcome speech, Deputy Governor Xuan Changneng chaired the event, and Deputy Governor Zou Lan was also present. In addition, Yi Gang, a member of the Standing Committee of the 14th National Committee of the Chinese People's Political Consultative Conference (CPPCC) and director of the Economic Affairs Committee, as well as president of the China Society for Finance and Banking, also attended the lecture. Lagarde answered questions from staff members of the PBOC and the State Administration of Foreign Exchange after her speech.

Governor Pan emphasized in his speech that China has always been committed to promoting global economic cooperation and development and is willing to explore solutions to trade imbalances with other countries. He reiterated that China will continue to pursue an open economic policy, promote trade liberalization and investment facilitation, and adjust policies as needed to meet domestic economic development requirements.

China's Proactive Approach to Trade Policy

Despite Lagarde's suggestions, China has already made significant adjustments to its trade policies in recent years. China has been actively working towards balanced trade development by expanding imports, optimizing export structures, and strengthening intellectual property protection. These efforts aim to improve the trade environment. China has also been actively involved in reforming and improving the multilateral trading system and advocates for building an open world economy.

China's stance on addressing trade imbalances is constructive. It recognizes that trade surpluses are not solely caused by subsidies but are the result of multiple factors, including industrial structure, market demand, and exchange rate policies. China is willing to work with other countries to explore solutions through enhanced cooperation and dialogue.

Global Cooperation as the Key to Addressing Trade Imbalances

Lagarde's speech underscored the importance of global cooperation in resolving trade imbalances. In today's globalized economy, where countries' economies are highly interdependent, trade imbalances can only be addressed through collective efforts. Unilateralism and protectionism will only exacerbate global economic instability.

China has always advocated for multilateral cooperation and actively participated in global economic governance. China believes that through enhanced dialogue and cooperation, countries can better coordinate policies to address global challenges. China is committed to working with other countries to promote the establishment of a fairer, more rational, and inclusive global economic governance system and contributing to global economic stability and prosperity.