The Chinese currency has been pegged to the US dollar since mid-2008, and Europe fears the euro’s rise against the yuan will hurt EU exports to China and will slow the bloc’s recovery.
China took a tougher tone Monday in defending its foreign-exchange policy, lashing out at critics who say restricting the yuan’s appreciation is hurting the global economy by keeping trade prices high.
Officials called such claims unfair and said such a move would jeopardize China’s economy.
Premier Wen Jiabao said that Beijing would follow its own pace on the currency issue, adding that a stable renminbi – the Chinese currency – is actually in the interest of the health of the world economy.
The comments came after Wen spoke at the the 12th China-EU summit in Nanjing, east Jiangsu Province, with top European Union leaders, including Swedish Prime Minister Fredrik Reinfeldt, who holds the EU rotating presidency, European Commission President Jose Manuel Barroso, and EU Foreign Policy Chief Javier Solana.
"Now some countries, on the one hand, want the renminbi to appreciate, but, on the other hand, they engage in brazen trade protectionism against China. This is unfair. In fact, it amounts to restricting China’s development," Wen was quoted by Reuters as saying.
China has claimed itself a victim in a recent slew of anti-dumping charges by the United States and Europe. The EU is China’s largest trading partner, accounting for a fifth of the country’s exports.
"In this international financial crisis of a kind rarely seen in history, maintaining the basic stability of the renminbi exchange rate has benefited China’s economic development and benefited world economic recovery," Wen said, according to Reuters.
"We will continue to improve the yuan exchange rate ... mechanism and maintain the basic stability of the yuan at a reasonable and stable level," AFP quoted Wen as saying.
A day earlier, top European economic and finance officials urged a "gradual and orderly" appreciation of the yuan. Beijing was encouraged to take "a more flexible policy," Jean- Claude Trichet said Sunday after talks between EU officials and Wen.
The Chinese currency has been pegged to the US dollar since mid-2008, and Europe fears the euro’s rise against the yuan will hurt EU exports to China and will slow the bloc’s recovery.
Zhou Shijian, a senior researcher at the Institute of Sino-US Relations at Tsinghua University, said that it would be hypocritical for foreign critics to insist on yuan appreciation.
"Europe followed the US in blaming China, as (Europe) is extremely anxious that their exports were being dragged by a rising euro," Zhou said. "They barked up the wrong tree,
as it is not the fault of the yuan, but the tumbling US dollar."
Accumulative depreciation of the dollar since March has been 15 percent, resulting in bulk commodities such as oil skyrocketing, hurting the global economic recovery, Zhou said.
China eyes a market-oriented exchange-rate mechanism, Zhou noted. "A stable yuan is already a huge contribution to the world economy, against the shrinking exports of China since this year.
In the first 10 months of 2009, China-EU trade volume fell by 18.7 percent, year-on-year, to about $292 billion, according to Ministry of Commerce figures.
China is now the EU’s second-biggest trading partner behind the US, and the biggest source of imports.
Li Daokui, director of the World Economy Research Center at Tsinghua University, said the EU and the US realized that they could hardly gain much from the globalization, so they sought to take a step back from the free-trade mechanism, an advocacy they had been insisting.
China and the EU, however, have room for cooperation in political and military areas, Li said. "As a major force for safeguarding world peace, the EU expects that China could also rise quickly to balance US hegemony."
Green economy
On the climate front, which was identified by analysts as a new growth area, both sides have penned their willingness to team up in tackling the pressing global issue.
A joint statement signed yesterday said China and the EU believe that "substantially scaled up financial support by developed countries and arrangements to promote technology dissemination and its transfer to developing countries would be an important outcome in Copenhagen."
Ding Chun, director of the Institute of European Studies at Fudan University, interpreted the statement as indicating that the EU is willing to cooperate with China’s development on environmental protection through technical and capital transfer.
"The move would not only help China’s growth in the area, but also be conducive to the spread of European technology around the world. Green economy will become a new growth point in bilateral relations," Ding said.
The European Commission has pledged to offer 57-million euros to a joint near-zero-emissions coal project, according to the statement issued by China and the EU, Xinhua said.
Wen Monday also urged his EU counterparts to relax export control over high-tech products to China.
Beijing said last week that by 2020 it would curb emissions per unit of GDP by between 40 and 45 percent compared to 2005 levels.
The EU offered to cut its 2020 emissions to 20 percent below 1990 levels, and by 30 percent if an ambitious world agreement can be reached.
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