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Europe goes gently on China at econ talks with Asia

Written by: Staff
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VIENNA, Apr 9 (Reuters) Finance ministers from Asia and Europe discussed the global economy on Sunday at a meeting where the Europeans steered clear of public confrontation with China over their demand that it let its currency rise in value.

''We should try to convince (them of) what is necessary for the world economy and not push from the outside as ... in the past,'' said Austrian Finance Minister Karl-Heinz Grasser.

He was hosting talks between 13 Asian and 25 European Union nations, although many of the key European ministers left the job to officials and returned to their own capitals after a brief gathering with their Asian counterparts on Saturday.

''Whatever you say, the Chinese will decide for themselves,'' Dutch Finance Minister Gerritt Zalm told reporters.

Europe, like the United States, wants Beijing to loosen its control over the yuan exchange rate on the grounds that it would create fairer competition in world trade and take the pressure off other Asian countries to copy China.

Chinese Finance Minister Jin Renqing held a brief, separate meeting on Saturday with European Central Bank chief Jean-Claude Trichet, European Commissioner Joaquin Almunia and Luxembourg Prime Minister Jean-Claude Juncker.

A European official, who declined to be identified, said that the yuan exchange rate was broached in Vienna but not in a forceful way.

''There were delicate suggestions from the European side that appreciation of the yuan should not be hindered, but no strong pressure,'' the official said.

An official accompanying Jin said on Saturday that Beijing was not going to be rushed under foreign pressure into letting its currency appreciate, China's standard line on the matter.

''Our government's position on yuan reform is a controlled gradual reform that is initiated by us,'' Wei Benhua, deputy director of China's State Administration of Foreign Exchange, said.

China, still under Communist Party control, has been moving towards a more free-market economy for decades but has exploded onto world export markets in the past few years, triggering the demands that it play by the established rules and let the yuan rate be set more by markets than the government.

Beijing shifted currency policy last July to let the yuan rise marginally but is under pressure to go further, although the Europeans are keen to do less public goading than the United States, where some politicians are telling the White House to impose tariffs on Chinese goods if nothing happens soon.

Japan's currency value, which is more freely set, is also a cause of concern for Europe after hitting a record low versus the euro on recent days, making the relative price of Japanese goods cheapr on world exports markets.

Bernd Pischetsrieder, head of carmaker Volkswagen , Europe's biggest exporter, highlighted the matter when he met the European finance ministers on Saturday.

''Today's exchange rate is what we have to live with as far as the dollar is concerned. With the yen, things are entirely different. Our Japanese competitors take lot of advantage from today's yen exchange rate,'' Pischetsrieder said.

The euro rose to a fresh record high against the yen on Thursday to 144.92 yen but closed the week slightly lower at 143.09 on Friday.

REUTERS MP PM1446

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