EU subtly presses yuan rise ahead of summit

A trio of European Union financial chiefs subtly pressed China Sunday to appreciate the yuan in a warm-up meeting prior to today's China-EU summit.

As the EU business community had urged China to allow the Chinese currency to appreciate faster, the yuan exchange rate was one of the major issues in talks between Chinese Premier Wen Jiabao and visiting Eurogroup President and Luxembourg Prime Minister Jean-Claude Juncker, European Central Bank President Jean-Claude Trichet and EU Economic and Monetary Affairs Commissioner Joaquin Almunia.

Juncker said that 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 after a day of talks with senior Chinese officials.

The trio had earlier expressed their concerns over the threat of China's export-led robust recovery on Europe's nascent growth emerging from the crisis.

China is under greater appreciation pressure than before, said Liang Zhaoji, a senior economist of DBS Group.

"Compared with the straightforwardness of the US, Europe holds the same anticipation over the yuan's appreciation, but in a reserved and subtle manner," He Maochun, director of the Economic Diplomacy Studies Center at Tsinghua University, told the Global Times. "But whether to appreciate the currency or not is something concerning financial sovereignty, which is subject to suggestions, not interventions."

"We will give play to the fundamental role of market supply and demand in setting the yuan exchange rate, and keep it basically stable around reasonable, balanced levels," China's Vice Foreign Minister Zhang Zhijun said last week.

In Japan, increasing the currency in value by 48 percent during 1985-87 did not alleviate its trade deficit to the US, Liang added.

The talks between the EU trio and Wen took place a day ahead of a major China-EU summit in Nanjing expected to focus on Sino-EU relations and other global issues, including economic recovery and climate change.

Considering the improved position of China in the international arena, China now has more global responsibilities, Liang said.