European Union leaders said Wednesday that they had urged Chinese Premier Wen Jiabao to act to raise the value of China’s yuan currency, during a fractious summit in Brussels.
“We stressed that structural reforms in Europe and in China were essential, and highlighted the role of appropriate exchange rates,” EU President Herman Van Rompuy and European Commission chief Jose Manuel Barroso said in joint remarks released at the end of talks that lasted under three hours.
“We underlined the importance of rebalancing global growth and reducing global imbalances,” the pair said, referring to concerns that an undervalued yuan skews trade flows in favour of cheap Chinese exports.
An EU source told AFP that the effort to get China to ease its policy of pegging the yuan to the US dollar, at a time when the euro has hit an eight-month high on currency markets, fell flat.
“We put our cards on the table,” the source said. “We heard each other out and managed to establish a dialogue of sorts in the economic sphere.
“But it was not an easy summit.”
Earlier, Wen had told a Europe-China business forum: “I say to Europe’s leaders — don’t join the chorus pressing (China) to revalue the yuan.”
A sharp yuan appreciation would “cause many Chinese companies to go bankrupt, casting people out of work … and creating social unrest,” Wen said.
The summit, which started an hour late, ended with Wen, due next in Rome for talks with Italian Prime Minister Silvio Berlusconi, left without meeting the Western media.
A planned press conference was cancelled when it became clear that time constraints and sharply diverging views on currency, trade, representation for emerging nations in global institutions, and human rights issues, dear to the EU’s heart, would not be bridged, the EU source added.
Van Rompuy and Barroso said that the EU also told Wen of “the need for a level playing field in China for our businesses,” including the “opening up of public procurement” — government contracts.
Europe has threatened to make it tougher for Chinese companies to win major contracts if it does not ease barriers.
Rompuy and Barroso also noted that on the issue of greater representation for emerging economies on global bodies such as the International Monetary Fund — something Beijing wants to see — more say came with added responsibilities.
“We underlined that enhanced representation should go hand in hand with enhanced responsibilities in global governance,” the two said.
Changes to board representation are likely to figure at the upcoming IMF annual meeting in Washington. The EU has offered reforms, including changes to its own seats, but attached a host of conditions in return.