China rebuffs EU currency appeal

Nanjing - Chinese Premier Wen Jiabao rebuffed an appeal from European leaders on Monday for faster reforms of currency policies that keep the yuan linked to the US dollar, as summit meetings wrapped up without any major new initiatives.

Beijing's policy on the yuan, also known as the renminbi, is what's best for China's economy and the world recovery, Wen insisted, following the signing of several agreements on technical and economic cooperation in this eastern Chinese city.

"Some countries demand change while practicing trade protectionism against developing countries," Wen told reporters.

"This is unfair," he said. "We will maintain the stability of the renminbi at a reasonable and balanced level."

Despite the apparent rancor over currency rates, Monday's meeting mostly focused on global issues such as climate change and the economic recovery.

European Commission President Jose Manuel Barroso said on Sunday he wants a more substantial commitment from China, the world's biggest emitter of heat-trapping greenhouse gas emissions, before next month's climate change talks in Copenhagen.

A promise of deeper emission cuts would help craft an agreement at Copenhagen.

"What is at stake is the very future of our planet," Barroso told reporters after dining with Wen.

Recent pledges on reducing carbon emissions by both China and the US, which together emit about 40% of the world's greenhouse gases, were welcome but inadequate, he said.

"Everyone is committing," Barroso said. "We have to see at the end if all these commitments together lead us to the minimum necessary that according to science we have to do. So far, we are not yet there," he said.

Like most summits, the event in Nanjing, west of Shanghai, is carefully scripted to prevent major surprises.

Coming just two weeks after US President Barack Obama's state visit to China, the summit with the 27-member European Union highlights the Chinese economy's star role in leading the world economic recovery, but also the difficulties of ensuring growth is sustainable and balanced.

On Sunday, top financial officials of the 16 nations that use the euro made clear their dissatisfaction with controls on the yuan that keep it linked to the weakening dollar, putting upward pressure on the euro.

"We think an orderly and gradual appreciation of the renminbi would be in the best interests of China and of the global economy," said Luxembourg Prime Minister Jean Claude Juncker, who heads economic talks in the eurozone.

Loosening currency controls to allow the yuan to fluctuate more freely, and presumably gain in value, is in the best interests both of China and the world economy, Juncker and other top financial officials said.

Echoing similar arguments from the US and other trading partners, they said they told Wen faster reforms would give China more leverage over its own economic policy, giving its citizens greater purchasing power and thus boosting domestic demand - a key requirement for more balanced, sustainable growth.

Shrugging off those appeals, Wen told the European financial leaders that China would keep the yuan stable while continuing to gradually make the yuan more flexible, the state-run newspaper China Daily reported on Monday.

"China hopes all major reserve currencies will maintain stability," Wen said. "The stability of Chinese currency is an important contribution to world financial stability," he was quoted as saying.

Despite such friction, relations between the two sides have warmed after a relatively chilly spell last year over French President Nicolas Sarkozy's threat to boycott the 2008 Olympic Games over China's handling of protests in Tibet.

EU leaders want progress on longtime economic issues, including hopes for an improved investment climate for foreign companies, stronger protections for intellectual property rights and more openness to foreign bids for government procurement contracts.

China has its own grievances, over antidumping cases and Europe's refusal to view it as a market-based economy - a practice that gives Chinese companies less protection in EU investigations into whether they are "dumping," or illegally selling below-cost goods.

China's human rights record remains a sore point for European leaders, while Beijing has long sought an end to the EU's arms embargo on China. It also is critical of meetings by leaders of some EU nations, such as France and Denmark, with the exiled Tibetan spiritual leader Dalai Lama.

Chinese Foreign Minister Yang Jiechi was expected to discuss the thorny topic of Myanmar, whose military regime has close ties to Beijing, with his Swedish counterpart, Carl Bildt and EU foreign policy chief Javier Solana.

While the two sides remain at odds over various issues, they share a determination to keep their dialogue open, Barroso said.

"There are some issues where we do not agree, China and the EU," Barroso said, but he added, "We should not put into question our common interests."

- AP