- Title: CHINA: European leaders call for gradual rise in Chinese yuan
- Date: 30th November 2009
- Summary: BEIJING, CHINA (FILE) (REUTERS) BANK STAFF AT WORK CHINESE CURRENCY NOTES BANK STAFF COUNTING CHINESE CURRENCY 100 YUAN NOTES IN COUNTING MACHINE
- Embargoed: 15th December 2009 12:00
- Keywords:
- Location: China
- Country: China
- Topics: International Relations,Finance
- Reuters ID: LVA101Y8E7QK2FLF73465IT7IPLY
- Story Text: European leaders say the world's economy would benefit from a steady rise in the Chinese yuan.
Senior euro zone officials said on Sunday (November 29) that a gradual, orderly rise in the yuan against all major floating currencies is in the interest both of China and of the world economy.
Luxembourg Prime Minister Jean-Claude Juncker, who chairs the Eurogroup of euro zone finance ministers, also said he understood why China had halted the appreciation of its currency during the global credit crunch.
Nor was there a need for a dramatic rise in the yuan's exchange rate from one day to the next, Juncker told a news conference in the eastern Chinese city of Nanjing .
"We would think that the orderly and gradual appreciation of the Chinese currency would be not only in the interests of the global economy but also in the interests of China, the Chinese people and Chinese economy," he said.
But, speaking after a day of talks with Premier Wen Jiabao and other senior Chinese officials, he said it was tough to justify the yuan's recent depreciation against a basket of currencies in light of China's fast economic growth and bulging external surpluses.
"We were mentioning the fact that it is difficult to communicate to our general public that the fastest growing economy in the world, that's the Chinese one, producing huge surpluses, is depreciating against the currencies of the major powerhouses," Juncker added.
European Central Bank Governor Jean-Claude Trichet said Chinese officials had promised to keep implementing the currency reforms launched in July 2005, when Beijing ended a peg to the dollar and said it would let the yuan float in a managed band with reference to a basket of currencies.
The yuan rose 21 percent in total against the dollar in the following three years until China effectively repegged the exchange rate last July around 6.83 per dollar to help its beleaguered exporters.
Juncker said Chinese officials had explained that it was tough to convince their domestic audience to back an immediate resumption of the yuan's rise. And Trichet said he did not read recent comments by the Chinese central bank as suggesting such a move was imminent.
"But I would not interpret it means immediate changes. It is again the decision of the Chinese authorities and I would not over-interpret. As the (Luxembourg) Prime Minister has done... what they have said, confirming that the reform had been decided and would be implemented," Trichet said.
But Joaquin Almunia, the EU's commissioner for economic and monetary affairs, said the euro zone delegation had been told that an eventual resumption of the yuan's appreciation would be part of China's strategy to pull back from the pro-growth policy stance it adopted a year ago.
The Chinese leader also had talks with Jose Manuel Barroso, president of the European Union's executive. - Copyright Holder: FILE REUTERS (CAN SELL)
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