Nanjing, China - The European Union failed Sunday to win a commitment from China for an "orderly and gradual appreciation" of its national currency, the yuan. Talks between a trio of EU financial leaders, Chinese Premier Wen Jiabao and the Chinese Central Bank and Foreign Ministry chiefs ended without agreement on the issue.
"I can't say that I am more optimistic than I was before," said Euro Group president Jean-Claude Juncker after the discussions in the eastern Chinese city of Nanjing.
"An orderly and gradual appreciation would be in the interest of China and the global economy," said Juncker, who is also prime minister of Luxembourg.
He said the talks, a day ahead of a China-EU summit in the city, were "friendly, but also frank."
European Central Bank president Jean-Claude Trichet, who also took part in the talks, said a realignment of the yuan would help eliminate global economic imbalances and benefit the Chinese economy.
Europe believes the Chinese currency is overvalued, which makes EU exports to China more expensive and keeps the price of Chinese goods sold in Europe artificially low.
China has more or less pegged its currency to the US dollar since the middle of 2008, but the euro has increased in value against the yuan around 20 per cent since the beginning of 2009.
US President Barack Obama also failed to persuade China to revalue the currency when he visited Beijing earlier this month.
Such a move would hit Chinese exporting companies, who have already taken a knock asa result of the drop in demand due to the global economic crisis.
Juncker said the EU was not pressing for an immediate, short-term revaluation of the yuan, but wanted to see China take a phased approach and adopt a more flexible exchange-rate policy.
But it was necessary to correct the misalignment between the Chinese currency and the euro, he said.
"We insisted on the need to bring global imbalances into a more calibrated situation," said Juncker.
The Chinese premier called the meeting with the Euro Group leaders "constitutes an important part of dialogue mechanism between China and the EU," China's biggest trading partner.
At their summit on Monday, China and the EU will discuss Sino-EU relations, and major global issues, including economic recovery and climate change.
Taking part for the European side are EU Commissioner Jose Manuel Barroso, and Swedish Premier Minister Fredrick Reinfeldt, whose country holds the rotating presidency of the 27-member bloc.
