Interview with Christine Lagarde, President of the ECB, conducted by Su Liang on 12 June 2025

14 June 2025

I was in the audience in 2018 at the opening ceremony of the first China International Import Expo in Shanghai. You said in a speech there that China built a bridge to the world, built a bridge to prosperity and is building a bridge to the future – the three bridges, which is famous in China. Has anything changed in your mind – is China building new bridges?

I haven’t been back to China for six years – that was my last visit, six years ago. From what I have seen so far, I can tell you that this bridge to the future is clearly an enterprise that China is working hard on. The combination of robotic artificial intelligence, hard work by the Chinese people and the strategic approach to it are contributing a lot to that bridge to the future. Development will occur fast on a threefold basis: robotic artificial intelligence, hard work and all of that focused on the industries of the future, which are going to change the Chinese economy even faster and better.

How does the ECB see China’s role in the global economic recovery, especially amid this increasing fragmentation in global supply chains? What kind of dialogue or cooperation would you like to see between the ECB and Chinese financial institutions?

The main cooperation and dialogue that we have at the ECB with China is with the People’s Bank of China (PBOC), because we are both central banks for a large region. We share some of the same concerns, some of the same challenges and we have a strong and deep dialogue on those issues. We are both very attached to the regulatory framework and supervision that will sustain financial stability. Our primary responsibility at the ECB is price stability, and this is clearly defined in our strategy. We are within reach of the 2% medium-term inflation target that we have defined as price stability. But we cannot have price stability if we do not have financial stability. And that’s the reason why we – and I think the PBOC is on the same page – are very attached to a solid regulatory environment and strong supervision so that our financial sector is stable and solid, because it is in the interest of the people that we serve.

This year marks the 50th anniversary of the establishment of diplomatic relations between China and the European Union, the then European Economic Community. As President of the ECB and previously a politician in Europe, how do you see the cooperation between China and the EU over the past 50 years?

The cooperation between the European Union and China has been beneficial to both sides. We have increased the level of trade between our two regions, and we have seen increased direct investment over the course of the last few decades.

And what will that cooperation look like in the future?

I very much hope, in the interest of financial stability and price stability, that China and the European Union will continue to cooperate, will continue their dialogue, will be candid with each other and will play by the rules that they both agree to. I’m thinking of the WTO rules, for instance, as rules that both regions have agreed to support and have signed up to. I think that determination for dialogue, cooperation and working on win-win solutions is something that will continue to be shared.

You talked about stability and about the rules. Do you think what the United States government is doing now is kind of a risk to stability and the rules? They are raising tariffs and creating uncertainty in the world economy.

I would focus on your last point. The level of uncertainty caused by the announcements or the threats of decisions is dampening investment. It is leading all institutions to reduce their growth projections for the global economy, for the United States, for China and for Europe. It’s really a lose-lose situation that we have at the moment. The sooner the uncertainty can be removed and agreements can be found between the parties – on tariffs in particular, but on other issues as well, such as non-tariff barriers – the better off we will all be. Economic players, investors and employers have great difficulty dealing with uncertainty. The same applies to us as central banks because when we need to forecast, anticipate the evolution of the economy and project the level of prices, if we have this great uncertainty, it makes our lives really difficult.

So when the delegations of China and the United States in London said they had made progress, that’s good news.

I hope progress goes in the direction of removing as much uncertainty as possible. If it reaches a new equilibrium, which is beneficial for all countries, then it’s a positive.

It is impossible to talk about China-EU relations without talking about China-US relations. You worked both in Washington and Europe. How do you see current China-US relations and how do you think China-US relations will impact China-EU relations?

I don’t want to make any projections or anticipate what the outcome of the discussions will be between the Chinese authorities and the US authorities. This is for political leaders, for trade and commerce secretaries to discuss and to take forward. But what I observe is that all our countries – European Union Member States, China, the United States and many other countries – are intrinsically bound by supply chains. When you start dissecting a product and you realise what the origin of the product is, where the spare parts are coming from, what journey it takes to travel from one place to the other, it is amazing how countries are linked to each other. What will impact one will impact others, and if the situation is not resolved satisfactorily and the uncertainty is not removed, the corporate world will rethink their supply chains. They will rethink their supply and their sourcing, and that will cause more fragility and a period of uncertainty, during which growth will probably be impaired, during which we could have inflationary pressure as a result. And I think this is not in the interest of any country. As I said, it’s not just the United States, China and Europe, it’s many other countries as well.

I remember you once said you stand by Adam Smith, you stand by liberalism. Do you think what we are witnessing in the world is a kind of failure of liberalism, the rules of free trade?

We have to acknowledge what the benefits have been and where there have been downsides. 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 this country, in China, how the well-being of people has improved. There have been many benefits as a result of international open trade and free markets, but there have also been some negative consequences. There are areas in the world where industrial activity has died, where people have lost jobs and where measures have not been taken to deal with that. So we have to be mindful of that. We have to look at that very honestly and decide how we want to remedy those situations. It has a lot to do with reducing the disequilibrium, reducing the imbalances that we see both on an international but also on a domestic basis.

Like you said, China has had a lot of benefits from globalisation, and China is now the second-largest economy in the world, and we have heard some concepts like de-risking from China in Europe. What is your opinion on this concept?

The principle of de-risking is not surprising, and I think it has been accentuated by the COVID-19 period. You know, during the pandemic, countries and regions suddenly realised that they no longer had manufacturing facilities to produce some pharmaceutical goods (e.g. masks) that were needed, and they were dependent and vulnerable as a result. This desire not to be vulnerable, not to be exclusively dependent on one single source of supply, is completely legitimate to the extent that those products – not necessarily masks – are considered strategic. It’s completely normal that countries think they need to have alternative sources of supply. We need to have a degree of security of supply so that we are not at the mercy of a failure, or a unilateral decision that would expose the security of our people. So I don’t find anything surprising about it. It is legitimate, but it does not stop cooperation. It does not stop international trade.

When it comes to financial innovation, people always focus on digital financing and green financing. The ECB is actively exploring a digital euro. How will this influence the future of finance from the perspective of European bankers? And on green innovation in financing, how can the ECB and the PBOC cooperate in the future?

Firstly, both the PBOC and the ECB are working on a digital currency. China was ahead, it started earlier. We started six years ago, and we are getting to the point where, if the legislature supports the proposal, we should be ready to launch. Why are we doing that? Simply because of client demand, to put it very simply. Because many Europeans – not all, but many – like to pay electronically, digitally, without cash. Many Europeans still like cash. I like cash. So we will continue to have cash, and we will be issuing new banknotes in a few years’ time. But we need, as a sovereign expression on the financial stage, to be able to respond to the demand of our customers, Europeans. If they want cash, we should be able to print secure banknotes. If they want digital cash, we should be able to offer a digital euro. We want to make sure that we have a European offer that is available, so that within the entire euro area there is a means of payment and a solid currency that can help you transact both online, peer-to-peer, business-to-business, and that’s the purpose of the digital euro.

And what about green financing?

Green financing is an activity that is conducted by commercial banks or international institutions. The European Investment Bank, which is a public institution, also has a role. And as you know, Europe has approved a green bond framework that is available, which I think China has observed very carefully in order to issue its own framework. But it’s a matter for commercial banks.

My final question is the following: you were the second most powerful woman in the world according to Forbes in 2019, 2020, 2022, 2023 and 2024. You have a life experience envied by women around the world. Do you have any advice for them on how to be successful?

Women have inside them the potential to thrive in whichever domain they choose. And I think that they should always draw on that confidence and energy without which things do not happen, and they should cultivate that and never be intimidated or refrain from achieving what they can. They have to believe in themselves. I hope they get the support that I was lucky to receive from family members and friends, as that is extremely helpful to continue doing what you want to do.