China's Wen says yuan stability vital, criticises pressure
Posted: 30 November 2009 1450 hrs

	Photos  of

NANJING, China: Chinese Premier Wen Jiabao on Monday criticised foreign pressure over Beijing's exchange rate policies as "unfair" and said a stable yuan was critical to his nation's economic recovery.

"Now some countries are on the one hand pressuring China to appreciate its currency while on the other hand they are practising trade protectionism against China in many different forms," Wen said.

"This is unfair. In fact these measures are restrictions on China's development."

Wen's comment came after meetings in the eastern Chinese city of Nanjing with top EU leaders who called for China to loosen its grip on the yuan.

He did not specify which "protectionist" measures he was referring to but China has been targeted in a recent flurry of anti-dumping charges and other trade remedy actions by the United States and Europe.

"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.

"We will continue to improve the yuan exchange rate... mechanism and maintain the basic stability of the yuan at a reasonable and stable level," he said.

Wen spoke at a joint address with Swedish Prime Minister Fredrik Reinfeldt, who holds the EU rotating presidency, and European Commission President Jose Manuel Barroso following a brief summit Monday morning.

Top European economic and finance officials the day before urged a "gradual and orderly" appreciation of the yuan.

"We discussed the exchange rate policy, the de facto peg of the yuan," Jean-Claude Trichet told reporters on Sunday after talks between EU officials and Wen.

He said officials encouraged Beijing to take "a more flexible policy," adding "it seems it would be appropriate."

The yuan's exchange rate is one of the thorniest trade issues between China and the European Union.

When Beijing officials talk about keeping the yuan "stable", it typically refers to maintaining its current value.

The Chinese currency has been effectively pegged to the US dollar since mid-2008, and Europe fears the euro's resultant rise against the yuan will hurt EU exports to China and slow the continent's economic recovery.

The EU is China's largest trading partner, accounting for a fifth of the Asian giant's total exports.

Following the Sunday finance talks, European Union Commissioner for Economic and Monetary Affairs Joaquin Almunia said the low value of the yuan against the euro had "led to a situation with which we are not satisfied."

"In this still difficult economic situation we should avoid protectionism... it is in the Chinese interests not to create conditions that can lead to protectionism," he told reporters.

- AFP/yb