Frankfurt am Main – In a rare interview conducted by Caixin Global , European Central Bank (ECB) President Christine Lagarde offered deep insights into her views on China’s evolving economic role, the dangers of global trade fragmentation, and the future of EU-China relations. Speaking from Frankfurt, Lagarde reflected on her long-standing engagement with China and emphasized the importance of continued cooperation in an increasingly uncertain world.
China’s “Bridge to the Future” Still Under Construction
Lagarde first visited China in 2018 for the inaugural China International Import Expo in Shanghai, where she famously praised the country’s “three bridges” — to the world, to prosperity, and to the future. Asked whether that vision still holds, Lagarde affirmed that China continues to build toward the future with vigor.
“From what I have seen so far, this bridge to the future is clearly an enterprise that China is working hard on,” she said. She highlighted China’s strategic investments in robotic artificial intelligence, its industrious workforce, and its focus on future-oriented industries as key drivers of rapid economic transformation.
Lagarde has not returned to China since 2018, but her observations suggest admiration for the pace and ambition of China’s economic modernization efforts.
Global Fragmentation Poses Serious Risks
With global supply chains under increasing strain, Lagarde voiced concern about the broader implications for financial and price stability. She underscored the ECB’s ongoing dialogue with the People’s Bank of China (PBOC), noting that both institutions share a common commitment to regulatory frameworks that uphold financial stability.
“Our primary responsibility at the ECB is price stability, and we are within reach of our 2% medium-term inflation target,” Lagarde said. “But we cannot have price stability without financial stability.”
She stressed that central banks must work together to ensure that markets remain resilient amid geopolitical tensions and shifting trade dynamics.
EU-China Relations: A 50-Year Partnership at a Crossroads
This year marks the 50th anniversary of diplomatic relations between China and the European Union. Reflecting on the past half-century, Lagarde acknowledged the mutual benefits of increased trade and investment, while also recognizing the growing complexities in the relationship.
“I very much hope, in the interest of financial stability and price stability, that China and the European Union will continue to cooperate, be candid with each other, and play by the rules they both agree to,” she said.
She specifically referenced World Trade Organization (WTO) rules as a shared foundation for fair and predictable trade.
Looking ahead, Lagarde expressed optimism that pragmatic cooperation could persist even amid calls in Europe for “de-risking” from China. She acknowledged the legitimacy of diversifying supply chains, especially after the disruptions caused by the pandemic, but insisted that such measures need not undermine broader economic ties.
U.S. Trade Policy: A Source of Uncertainty
Lagarde did not shy away from commenting on the U.S. government’s recent actions, which include raising tariffs and introducing new trade barriers. While stopping short of directly criticizing U.S. policy, she pointed to the damaging effects of uncertainty on global growth and investment.
“The level of uncertainty caused by announcements or threats of decisions is dampening investment,” she said. “It is leading all institutions to reduce their growth projections for the global economy.”
She welcomed recent reports of progress in U.S.-China talks, expressing hope that any agreement would reduce uncertainty and lead to a more stable global trading system.
Interdependence Remains Key
Despite rising protectionism and calls for self-reliance, Lagarde emphasized the deep interconnections between global economies. She noted how supply chains crisscross national borders and how disruptions in one region ripple across the world.
“If the situation is not resolved satisfactorily and the uncertainty is not removed, the corporate world will rethink their supply chains,” she warned. “That will cause more fragility and a period of uncertainty during which growth will probably be impaired, along with potential inflationary pressure.”
Liberalism and Globalization: Imperfect, But Worth Saving
When asked whether the current wave of trade wars represents a failure of liberal economic principles, Lagarde took a balanced view.
“We have to acknowledge what the benefits have been and where there have been downsides,” she said. “The benefits have been incredible when you look at how much additional activity has prospered, how much growth has increased, how many people have been taken out of poverty — particularly in China.”
At the same time, she recognized that globalization has left some communities behind and called for honest reflection on how to address those imbalances.
Digital and Green Finance: Areas for Collaboration
Turning to innovation, Lagarde highlighted the ECB’s work on the digital euro and expressed confidence that it would soon be ready for launch if approved by legislators. She framed the digital euro as a public service aimed at meeting changing consumer preferences while preserving monetary sovereignty.
On green financing, she noted that while commercial banks and institutions like the European Investment Bank play the main roles, the EU’s green bond framework could serve as a model for others — including China.
A Final Word of Encouragement for Women
In closing, Lagarde — who has been named one of the most powerful women in the world by Forbes for several years — offered a message to women aspiring to leadership roles.
“Women have inside them the potential to thrive in whichever domain they choose,” she said. “They should always draw on that confidence and energy… and never be intimidated or refrain from achieving what they can.”
