European Union policymakers met with Chinese Prime Minister Wen Jiabao on Tuesday in Brussels at the EU-Asia Summit to discuss matters of economy, trade and cooperation.
One of the biggest issues on the cards for the EU delegation was that of China’s undervalued currency, which both the EU and the US claim China keeps artificially low in order to boost exports and competitiveness with the west, at the same time undermining western jobs.
Jean-Claude Juncker, chairman of the euro-zone finance ministers, told reporters at a press conference Tuesday that China’s real currency rate remains undervalued. He said that the EU delegation had urged for a "orderly, significant and broad-based appreciation" of China’s currency, the yuan, but that "The Chinese authorities do not share our view."
The talks come as fears of a global ‘currency war’ surface after major currencies holders, such as the US and Japan seek to weaken their currency value in a bid to stimulate stagnant economies. The EU has expressed concern that if this eventuates, they will be left with an overvalued currency which would stifle their economic activities.
France is set to take over the Presidency of the G20 next month, and high on the priorities list is international economic reform. They are hopeful about drawing China into discussions and multilateral negotiations about currency coordination.
While the EU welcomes the Chinese initiative to make the yuan more flexible on the exchange, they are nevertheless impatient to see it floated freely on the currency markets.
