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China digs in heels on yuan, cooperates on climate

Published 11/29/2009, 11:08 PM
Updated 11/29/2009, 11:09 PM
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* Wen rebuffs EU on yuan, say it will remain stable for now

* China "solemn and serious" about cutting carbon intensity

* EU bemoans lack of ambition in climate change pledges

By Chris Buckley

NANJING, China, Nov 30 (Reuters) - China fended off renewed pressure on Monday to let its currency rise but pledged to help make a success out of forthcoming climate change talks.

Speaking at a briefing after summit talks with the European Union, Premier Wen Jiabao said the demands being made of Beijing to push up the yuan's exchange rate were not fair.

He reaffirmed China's determination to take its own, gradual steps on the currency front but said that for now the yuan, also known as the renminbi, was being kept broadly steady.

"In this international financial crisis of a kind rarely seen in history, maintaining the basic stability of the renminbi exchange rate has benefited China's economic development and benefited world economic recovery.

"Now some countries, on the one hand, want the renminbi to appreciate but, on the other hand, engage in brazen trade protectionism against China," Wen said.

The United States in particular has taken a number of steps recently to slow a surge in competitively priced imports from China in sectors including steel, tyres and paper.

"Faced with the present complex economic conditions, we must appropriately handle trade friction and not engage in trade protectionism. I hope the EU will relax its controls on high-tech exports to China," Wen said.

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The thorny question of the yuan's exchange rate has dominated two days of talks with an array of high-ranking EU policymakers in this eastern Chinese city.

The three top economic officials representing the 16 EU members that use the euro pleaded in vain on Sunday for a renewed rise in the yuan, which China has pegged around 6.83 per dollar since July 2008 to help its exporters weather the global credit crunch.

The EU is China's biggest market, taking 20 percent of its exports, and runs a big bilateral trade deficit with China.

NOT AMBITIOUS ENOUGH

While digging in his heels over the currency, Wen said China was "solemn and serious" in its vow to cut the amount of carbon dioxide emitted per unit of economic output by 40 to 45 percent by 2020 compared with levels in 2005.

Some global climate analysts have said China's goal is technically modest.

However, Wen restated China's position that developed countries must lead the way in climate change talks starting next week in Copenhagen by offering big cuts in carbon emissions.

Advanced economies must also make financing and technology available to developing nations to help them tackle global warming, Wen added.

This demand was part of a common stance towards the Copenhagen talks that China forged at the weekend with India, Brazil and South Africa. [ID:nSP354006]

Speaking for the EU, European Commission President Jose Manuel Barroso urged all parties in Copenhagen to aim for an "ambitious, operational" accord to fight global warming.

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Swedish Prime Minister Fredrik Reinfeldt said countries were not aiming high enough in their proposals to reduce carbon emissions.

"The global efforts put on the table for mitigation are not enough ... More needs to be done," Reinfeldt, whose government holds the rotating presidency of the 27-member European Union, told the briefing.

Wen suggested that renewable energy and clean-coal technology could be a focus for cooperation between the two sides.

Turning to the economy, Wen said it was too early to abandon the pro-growth policies adopted to counter the credit crunch.

"China and Europe must maintain the intensity of their economic stimulus and strengthen coordination and cooperation in macro-economic policy and financial oversight, encouraging the recovery and sustainable development of the world economy," the premier said. (Reporting by Chris Buckley; Writing by Alan Wheatley; Editing by Ken Wills) ((chris.buckley@thomsonreuters.com; +86-13501014479)) ((If you have a query or comment on this story, send an email to newsfeedback.asia@thomsonreuters.com))

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