EU officials fail to sway China on yuan

“I can't say I'm more optimistic” about yuan appreciation, Jean-Claude Juncker, who chairs a group of euro-area finance ministers, said at a press briefing in Nanjing, China today. Chinese officials had explained that it was hard to convince their public of the benefit of immediate gains, Juncker said.

European leaders want China to loosen controls on the yuan that shelter Chinese exporters from the U.S. currency's slide and expose the euro region to it. The euro has surged about 20 percent versus the U.S. currency since Feb. 18, making exports less competitive and undermining the region's recovery from the worst slump since World War II.

“An orderly and gradual appreciation of the renminbi would be in the best interests of China and the European economy,” Juncker said, using another term for the yuan. He said that the EU and China had “not yet” reached an agreement on this “very difficult point of concern.”

Both European Central Bank President Jean-Claude Trichet and Juncker indicated at the briefing that no immediate change to China's currency polices was likely. Chinese officials confirmed that they will continue to implement currency reforms begun in 2005, when a fixed exchange rate ended, Trichet said.

'We Will See'

Trichet told Bloomberg Television: “I don't over-interpret our discussions. It is their decision and we will see.”

The European officials met yesterday with Chinese National Development and Reform Commission Chairman Zhang Ping, People's Bank of China Governor Zhou Xiaochuan, Finance Minister Xie Xuren and Premier Wen Jiabao.

Juncker said the Europeans delivered their message about the currency in a “frank” way.

The Europeans' visit is after U.S. President Barack Obama left Beijing this month without a commitment from the authorities to let the exchange rate strengthen. International pressure is growing on China after the Group of 20 nations, of which it is a member, agreed in September to make the world economy less reliant on Chinese savings and U.S. demand.

Trichet told Bloomberg Television that rebalancing the global economy would also aid China's “own stability and prosperity.”

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