Protectionism, yuan pressure "unfair": Wen

08:48, December 01, 2009      

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Premier Wen Jiabao Monday rejected "unfair" calls from European countries for faster reform of China's currency policies, despite lobbying from EU financial chiefs at the weekend.

"Some countries demand the yuan's appreciation while practicing various trade protectionism against China. It's unfair and actually limits China's development," Wen told reporters in Nanjing, Jiangsu province.

European Commission President Jose Manuel Barroso and Swedish Prime Minister Fredrik Reinfeldt, whose country holds the rotating EU presidency, were also at the press conference.

Wen's unusually direct response followed a one-and -a-half hour summit between China and the EU, which has 27 member-nations. The summit ended with five agreements mainly on energy and environmental cooperation.

But it also ended without a breakthrough on issues that have brought stalemate between the sides, such as trade disputes and arms embargoes.

Wen said China will keep the yuan basically stable and carry out currency reform at its own, gradual pace.

A stable yuan is not only good for the Chinese economy but the world, Wen said.

The meeting took place against the backdrop of concern about the rising euro and the possibility it might derail the recovery in Europe, which imports heavily from China.

The yuan began gaining against major currencies after a set of exchange rate reforms were introduced in July 2005. After rising nearly 20 percent against the US dollar, it hovered around 6.83 to the US dollar for about a year. In the past month or so, the euro has risen to a 15-month high.

Euro Group President and Luxembourg Prime Minister Jean-Claude Juncker joined other European leaders in lobbying China's senior officials.

The Chinese officials explained that it was difficult to make a case for "immediate renminbi appreciation" in a country where 40 million people live on less than 1 U.S. dollar a day.

The failure of the EU appeal was expected because Europe was only thinking about itself, claimed Wu Baiyi, a European studies expert at the Chinese Academy of Social Sciences.

Zhao Junjie, Wu's colleague, said that while China is not able to quickly change its currency policy, Beijing had made efforts in the past year to fill the EU trade gap.

"Actually, some of the goods bought by the dozen purchasing groups that China sent to the EU during the past year were bought only for the sake of the EU," he said. "But the EU still wants more."

Glenn Maguire, chief Asia-Pacific economist at Societe Generale SA in Hong Kong, told Bloomberg: "China will only adjust on its own terms and in its own time. It's decided that now is not the time to do that."

Despite lingering disputes, including trade protectionism and the EU's ban on the transfer of technology to China, Wen Monday raised expectations for improved relations with Beijing's largest trading partner.

"China and Europe walking together hand-in-hand will make the steps of humankind more steady, and that best illustrates the strategic significance of our ties," said Wen.

Barroso and other EU leaders Monday also applauded fresh Chinese commitments on countering climate change.

Stanley Crossick, founding chairman of the European Policy Centre, said Europe will need to commit to lifting its arms embargo against China.

"Beijing is right that listing China among a handful of embargoed pariah states is totally inconsistent with the treatment of a strategic partner," he said.

Crossick suggested that EU officials be trained in contemporary China and taught Mandarin.

Wen opened the door to better understanding Monday, announcing that 2011 will be the year for China-EU youth communication and the establishment of other youth and cultural exchange mechanisms.

Source: China Daily

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