Europe Seeks ‘Orderly, Gradual’ Yuan Appreciation, Juncker Says
European finance chiefs renewed calls for China to let its currency appreciate amid concern that the strengthening euro may undermine the region’s economic recovery.
Europe is seeking “an orderly and gradual appreciation of the yuan against the euro,” rather than “abrupt” or “dramatic” changes, Luxembourg’s Jean-Claude Juncker said late today in Brussels after leading a meeting of finance ministers from the 16 nations using the euro. The International Monetary Fund’s Europe chief, Marek Belka, told the meeting the euro was “over-valued” and the finance chiefs agreed, Juncker said.
The euro has surged about 20 percent in nine months against the U.S. dollar, which the yuan tracks, making European exports more expensive and threatening to undercut the recovery from the worst slump since World War II. Even after Europe’s economy returned to growth in the third quarter, European Aeronautic, Defence & Space & Co., the owner of Airbus SAS, said on Nov. 16 that profit slid 77 percent, partly because of a weaker dollar.
Diplomatic efforts from European and U.S. officials have failed to convince Chinese authorities to let their currency appreciate. Juncker said his visit to China last month with European Central Bank President Jean-Claude Trichet and European Union Monetary Affairs Commissioner Joaquin Almunia had not managed to secure assurances from Chinese officials.
“An appreciation of the yuan is in the interests of Europe, of course; but equally in the interests of the Chinese people,” Juncker said. “Our Chinese friends do not see it in the same way.”
‘Unfair’ Calls
Chinese Premier Wen Jiabao earlier this week rejected what he termed “unfair” calls for the yuan to appreciate. In the financial crisis, “a stable yuan is helpful to the development of the Chinese economy and the world’s economic recovery,” Wen said on Nov. 30.
Authorities in Beijing have held the currency steady against the U.S. dollar since July 2008, letting it track the dollar’s 8 percent decline against a basket of currencies this year.
French President Nicolas Sarkozy also criticized the dollar’s decline against the euro today, saying Europe “can’t go on like this with a euro whose value has risen 50 percent against the dollar.” In a speech in La-Seyne-sur-Mer, France, Sarkozy called for a “multi-currency” world to end the dominance of the U.S. currency.
French Finance Minister Christine Lagarde and Portuguese Prime Minister Jose Socrates are among European officials who have complained about the strength of the euro. Trichet reiterated on Nov. 23 that it was “extremely important that the U.S. authorities say that a strong dollar is in the interests of the U.S.” He said a strong dollar is good for the “stability of the global economy.”
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