Currency row

Chinese Premier Wen Jiabao described foreign pressure on Beijing to allow its currency to appreciate as "unfair," saying it amounted to imposing restrictions on China's economic growth.

"In the face of the unprecedented international financial crisis, to maintain the basic stability of the yuan exchange rate is conducive to China's economic growth and the world economic recovery," Wen said.

When Beijing talks about keeping the yuan "stable," it generally means maintaining its current value.

Wen's comments came after meetings on Sunday with Jean Claude-Trichet, president of the European Central Bank, Joaquin Almunia, the EU's economic and monetary affairs commissioner and Jean-Claude Juncker, chairman of the Eurogroup of finance ministers.

"We think an orderly and gradual appreciation of the (yuan) would be in the best interests of China and the global economy," Juncker told a press conference in the eastern Chinese city of Nanjing after two days of talks with senior Chinese leaders. But Juncker acknowledged that he was not "more optimistic than I was before I came here" that Beijing would change its currency policy.

China has kept its currency pegged to the US dollar for the last 16 months, even as free-floating currencies such as the euro have seen their value skyrocket.

Currency chorus

The EU, which has generally been quiet on the currency issue, is now adding its voice to Washington's calls on China to allow the yuan to float. The high value of the euro makes European products more expensive abroad, which hurts exports.

EU-Chinese trade relations already have an acrimonious edge to them as charges and counter charges regarding steel rods, shoes solar-power technology and other products have flown back and forth. Analysts warn that more heated trade battles are likely if China's currency remains at its current low value.

The EU is China's biggest market abroad, taking in 20 percent of its exports. Europe ran a trade deficit of 65 billion euros with China in the first half of 2009.

EU Commission President Juan Manuel Barroso was among those pressing China on Sunday on its currency, but in remarks to reporters on Monday, he did not mention the yuan and abruptly cancelled another news conference about the summit.

Climate talk

More progress was made in other areas, such as the environment. Wen, Barroso and Swedish Prime Minister Fredrik Reinfeldt, whose country currently holds the EU's rotating presidency, were present at the signing of five bilateral agreements.

They cover technological cooperation, near-zero emission coal use, energy efficiency and building quality, sustainable development and environmental management.

"We cannot solve the climate challenge to mankind without China taking on leadership and responsibility," Reinfeldt said in his capacity as EU president.

Wen told the EU that China would deliver on a promise to curb carbon dioxide output, although last week, the country's climate pledge promised not to cut greenhouse gas emissions but essentially to work toward greater energy efficiency. The plan would see China's fast-growing emissions continue to grow along with its economy.

The plan has been criticized by some, and on Sunday, Barroso urged China to explore the "outer limits" of its position."

Wen, however, defended China's offer, saying it marked "a major contribution to global efforts" against climate change.

"China places high importance on the upcoming Copenhagen conference," he said. "China is willing to work to move the conference in the right direction."

jam/Reuters/AFP/dpa
Editor: Chuck Penfold