Concerns over euro's strength to be voiced on Beijing trip By Ralph Atkins in Frankfurt
Wednesday, November 07, 2007
European efforts to encourage a speedier appreciation of the Chinese renminbi will step up a gear this month amid concern the euro is bearing the brunt of global macroeconomic adjustments.
Jean-Claude Juncker, prime minister of Luxembourg, who chairs meetings of eurozone finance ministers, will be joined on a lobbying mission to Beijing by Jean-Claude Trichet, president of the European Central Bank, and Joaquin Almunia, the European Union's monetary affairs commissioner.
Their visit is officially separate from a European Union/China summit, taking place at the same time in Beijing, but appears deliberately timed to maximise the impact of their message. Nicolas Sarkozy, the French president, who has voiced fears about the euro's strength, is also expected in China at about that time.
European policymakers have long fretted privately about the renminbi's value. But in public they have adopted a softly-softly approach in comparison with the high-profile campaign by US leaders. Europeans apparently believe that public demands might go down badly with the Chinese authorities, especially Beijing, who see the appreciation of the currency as in the interest of other nations.
The EU's trade deficit with China has grown rapidly recently, reaching €6.1bn ($125bn, £60bn) in the first seven months of this year alone, according to Eurostat, the EU's statistical unit. But the dollar's recent weakness has intensified fears that the euro is shouldering an unfair burden, harming the interests of its exporters as the euro soars to fresh records.
“The Europeans are getting . . . worried the euro is going to bear the brunt of the adjustment of the US dollar and of global imbalances,” says Marco Annunziata, economist at Unicredit.
Such fears crystallised before last month's Washington meeting of finance ministers and central bank governors from the Group of Seven industrial nations, when eurozone finance ministers put the Chinese currency at the top of their concerns. The renminbi was subsequently explicitly mentioned in the G7 summit communiqué. “We made it clear during the G7 meeting our first concern as Europeans is the [renminbi],” Mr Juncker said afterwards.
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