China and the European Union (EU) yesterday agreed to set up two
separate high-level dialogue mechanisms on trade and finance to
address disputes over trade imbalances and the exchange rate reform
of the renminbi.
Premier Wen Jiabao, Jose Socrates, prime minister of Portugal -
which holds the rotating EU presidency - and Jose Manuel Barroso,
European Commission president, agreed to launch the dialogue
mechanisms in March next year at the 10th China-EU Summit in
Beijing.
The Chinese government will further let the market determine the
renminbi exchange rate and allow more flexibility in its trading
band, Wen said at a joint news conference with the EU leaders after
a 90-minute meeting.
But he emphasized China will act "in a proactive, manageable and
gradual manner," with a view to gradually enabling capital account
convertibility.
Europe has complained that an "undervalued" yuan and the rising
euro are a key reason for the rising bilateral trade deficit.
Wen acknowledged that the exchange rate played a certain role in
the imbalance, but said it was not the sole factor.
"The exchange rate is a cause, to some extent, but not the sole
decisive factor for the trade deficit," Wen said at a China-EU
Business Summit before he met with the EU leaders.
He said China has never intended to pursue a trade surplus,
adding that efforts are being made to promote domestic consumption
to achieve more balanced trade.
"The Chinese government attaches great importance to the EU's
concerns over the trade imbalance. We have, and will continue to,
put in place measures aimed at expanding imports and promoting more
balanced bilateral trade," Wen said.
During a meeting with Jean-Claude Juncker, prime minister of
Luxembourg and chairman of the Eurogroup of finance ministers, Wen
called on the United States, the EU and Japan to shoulder the main
responsibility for keeping the international currency system
stable.
The euro has appreciated greatly in recent years due to the
declining US dollar and international market turbulence, he
said.
Wen pointed out that EU exports to China have grown at an annual
rate of more than 20 percent over the last two years, compared to
the 15 percent average growth rate elsewhere.
He responded to another concern frequently aired by the EU - a
lack of strong enforcement of intellectual property rights - by
saying that China has been "sincere" in IPR protection.
He said China has, over the past 20 years, set up a "relatively
complete" IPR legal framework and strengthened enforcement, which
has resulted in "phenomenal progress", adding that such progress
took "centuries" in developed countries.
Leaders from the two sides also discussed climate change, the
China-EU partnership on Africa and the Taiwan question.
Socrates said the strategic partnership between the EU and China
is beneficial to Europe, China and the world at large. He said the
EU hopes the two sides can take constructive action to find a trade
balance.
He appreciated China's role in major regional and international
affairs such as the Korean Peninsula and Iran nuclear issues,
saying EU-China cooperation will help resolve global issues.
Barroso hailed the meeting as a "success" and said it has
achieved "pragmatic results".
The EU leaders assured Wen that the EU strictly adheres to the
one-China policy.
(China Daily November 29, 2007)
