China urges Europe to put euro in order

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China urges Europe to put euro in order

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Beijing wants to see EU political consensus effectively pull the bloc out of its debt crises.

With part of its 2.65 trillion dollars worth of foreign currency reserves in euros, China wields considerable power with the EU, and the debt crisis has added leverage in dealings with its biggest trade partner.

Europe’s top official in these dialogues, in his turn, has expressed his side’s continuing frustration with Beijing’s deliberately under-valued yuan.

EU Economic and Monetary Affairs Commissioner Olli Rehn said: “I reiterated our commitment to move towards a market-determined exchange rate system that reflects underlying economic fundamentals.”

At talks in Beijing, the Communist giant said that, after playing a supportive role in European rebalancing, it hoped to see improvements soon.

The Vice-Premier highlighted the risks of still-weak global economic demand and financial markets awash in excess cash.

Wang Qishan, Chinese Vice-Premier, said: “We should jointly promote the reform of international economic and financial rules and standards. It is important to oppose all forms of protectionism, to exercise prudence in adopting trade remedies and to push for comprehensive, balanced outcomes of the WTO Doha Round negotiations, at an early date.”

Analysts say that on one hand, China does not want Europe’s difficulty to push commodity prices higher.

But on the other hand, Beijing’s foreign exchange advantage is a strategic tool to chip away at what it sees as growing European protectionism and tariffs.