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Updated Monday, November 30, 2009 10:48 am TWN, Bloomberg



	Wen Jiabao, China's premier, right, speaks with Jose Manuel Barroso, president of the European Commission, during a meeting prior to the EU-China Summit in Nanjing, China, yesterday. European officials indicated that they failed to shift Chinese currency policies that have halted gains by the yuan against the dollar since July 2009. (Bloomberg) Enlarge Photo

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EU officials fail to sway China on yuan

'Quite Confident'

In the past six months, the yuan has fallen 6.5 percent against the euro. China has kept the yuan at about 6.83 against the U.S. dollar since July 2008, arguing that stability has aided the global recovery from the financial crisis.

Obama told President Hu Jintao and Premier Wen Jiabao that the U.S. expects progress on making the yuan “more flexible” by mid-2010, according to Jon Huntsman, the American ambassador to China. That is when talks between the U.S. State and Treasury secretaries and their Chinese counterparts are due to take place in China.

“There will be a bit stronger pressure on China even if the point is probably more effectively made behind the scenes,” Julian Callow, chief European economist at Barclays Capital in London, said before today's briefing. “But I imagine Trichet having gone all this way that they want to come back with a message that China understands their position and is committed to more flexibility in due course.”

Stimulus to Stay

While the 16-member euro-region economy returned to growth in the third quarter, the euro's ascent is making exports less competitive abroad and eroding companies' earnings. European Aeronautic, Defence & Space & Co., the owner of Airbus SAS, said on Nov. 16 that third-quarter earnings slumped 77 percent, partly because of a weaker dollar.

Juncker said today that while the euro area was showing clear signs of an economic recovery, there would be no major withdrawal of fiscal stimulus measures in the region in 2010. Around the world, it's too early to eliminate stimulus, he added.

Deutsche Telekom AG Chief Executive Officer Rene Obermann said on Nov. 5 the company is looking “very carefully” at developments in currency markets. The dollar's depreciation and other exchange-rate movements cut third-quarter revenue at Europe's biggest phone company by about 100 million euros compared to the second, spokesman Andreas Leigers said.

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