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EU, China confront each other on trade dispute
2007-11-28
China and Europe confronted each other over their long-running trade dispute here Wednesday, with the EU calling for a level playing field and Chinese Premier Wen Jiabao insisting on gradual reform. "The EU exports less to China than to Switzerland, a country of seven million people," European Commission President Jose Manuel Barroso told a business forum on the sidelines of annual summit between the two sides. "Our ultimate goal is to create a level playing field for both sides." EU Trade Commissioner Peter Mandelson spoke out at the same forum about China's trade surplus, which has put the focus on the Chinese currency, the yuan, with critics arguing it is being kept artificially weak. "Our trading relationship with China started as we know in a balanced way," Mandelson said, with Wen in the audience. "Now it is less balanced. Indeed in my time in China these last five days, it has grown by over two billion euro," he said, referring to the trade surplus. In reply, Wen told the audience of European and Chinese business chiefs that China would continue with its policy of gradual reform of the yuan, also known as the renminbi or RMB. "China will continue to reform the RMB exchange rate regime in a gradual, proactive and manageable manner," he said, while insisting the Chinese currency was not the only reason for their trade dispute. "The exchange rate is a cause to some extent, but not the sole decisive factor behind the trade deficit." Amid the dispute, European representatives said they wanted to avoid protectionist measures. "We... need to identify a solution to solve this question, and I hope that it is a cooperative one," Serge Abou, the EU's ambassador to China, said in an opinion piece in the China Daily newspaper published Wednesday. "Protectionism is not a winning option. So let us unite our efforts to resist protectionist trends." The EU, China's largest export market, ran a trade deficit of 128 billion euros (175 billion dollars) with China last year -- which is likely to balloon to 170 billion euros in 2007, according to EU statistics. The main argument from the EU, and other trading partners such as the United States, is that the artificially weak yuan makes Chinese products cheaper on the overseas market. Ahead of their speeches to the summit, Barroso held talks with Chinese President Hu Jintao. A European delegation headed by Barroso also met with Li Keqiang, a member of the ruling Communist Party's nine-member Politburo Standing Committee. "Since 1975, this relationship has come a long way," said Li, widely considered a rising political star among the next generation of leaders slated to assume power in five years. "I particularly want to mention our fast growing business ties," Li told the European visitors.
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