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EU says revaluation of China's yuan would be 'appropriate'

Text by NEWS WIRES

Latest update : 2009-11-30

European Union financial chiefs have urged China to adopt "a more flexible policy" regarding the yuan currency's exchange rate following talks with Chinese Prime Minister Wen Jiabao (pictured).

AFP - The head of the European Central Bank said here Sunday that a revaluation of the yuan currency would be "appropriate" after talks with China's Premier Wen Jiabao.

"We discussed the exchange rate policy, the de facto peg of the yuan," Jean-Claude Trichet told reporters at a briefing after talks between EU officials and Wen in the eastern city of Nanjing.

He said officials encouraged Beijng to take "a more flexible policy," adding "it seems it would be appropriate."

The talks, which also involved Eurogroup chief Jean-Claude Juncker and EU economic and monetary affairs commissioner Joaquin Almunia, took place a day ahead of a major China-EU summit expected to focus on climate change.

The yuan currency's exchange rate is one of the thorniest issues between China and the European Union.

The Chinese currency has been effectively pegged to the dollar since the summer of 2008, and Europe fears the euro's rise against the yuan will hurt EU exports to China and eventually slow the continent's economic recovery.

But Beijing, which faces complaints from both the United States and Europe that it is manipulating its currency to gain an unfair trade edge, says it wants to take its time and reform its exchange rate system.

Juncker also told reporters that the global economic recovery was not strong enough yet to withdraw stimulus measures introduced by various governments to fight the financial crisis.

"We are considering the moment has not yet arrived to withdraw the stimulus packages that are under way in various parts of the world," he said.

"The euro area will see no major withdrawal of stimulus measures in 2010."
 

Date created : 2009-11-29

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