China’s continued use of export restrictions on critical minerals and its reluctance to address non-market economy concerns complicate efforts to issue a joint communique on global imbalances.

The EU faces a first-ever collective trade deficit with China and warns it is ready to activate trade defense measures if dialogue with Beijing fails to yield results.

EU talks between Trade Commissioner Maroš Šefčovič and Chinese Commerce Minister Wang Wentao in June aimed to intensify consultations and set a tangible October deadline, including launching a new trade and investment consultation forum.

The EU’s trade deficit with China runs at about EUR 1 billion per day, with October identified as the cutoff to reach an agreement that restores balance in commercial ties.

Global bond market volatility intensified amid debt and inflation concerns, with Japan’s 10-year yield hitting 3% for the first time since 1996, signaling investor anxiety.

Developments in global bond markets reflect energy-driven inflation and monetary tightening pressures, contributing to wider financial-market unease.

Germany’s Lars Klingbeil warned that Iran tensions and tariff disputes, tied to U.S.-Israel led concerns, are dragging on global growth and eroding trust and economic activity.

Japan’s Satsuki Katayama urged the removal of arbitrary export restrictions on critical minerals, warning of negative spillovers for the global economy.

China’s use of rare-earth export controls and subsidies is viewed as a concern for non-Chinese economies, with warnings about adverse effects of arbitrary restrictions.

Merz argued that the yuan is undervalued by roughly 25–30%, a claim raised during a June 2026 G7 discussion to push for policy action beyond market forces.

U.S. Treasury Secretary Scott Bessent warned that tougher tariffs could redirect Chinese goods to other markets, a shift he says is already beginning.

Bessent also urged partners to act to safeguard jobs, arguing that tariff retaliation would push Chinese exports toward alternative markets.