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UPDATE 1-EU trade chief nominee says yuan should rise
January 12, 2010 / 1:20 PM / 8 years ago

UPDATE 1-EU trade chief nominee says yuan should rise

* EU’s de Gucht ups pressure on China over forex

* Says yuan revaluation would boost economic recovery

* China became world’s biggest exporter in 2009

(Combines stories, adds details and background)

By Darren Ennis and Dale Hudson

BRUSSELS, Jan 12 (Reuters) - China should revalue the yuan to ease global trade imbalances, the European Union’s trade commissioner-designate said on Tuesday, heaping more pressure on Beijing to let its currency appreciate.

Revaluation of the yuan would boost economic recovery, helping China as well as other countries, Karel de Gucht told reporters.

“When one looks at trade flows between the EU and China ... the overall answer is, there should be a revaluation of the renminbi (yuan),” he said after setting out his policy plans to the European Parliament.

He told the 27-country EU’s assembly, which votes on Jan. 26 on whether to approve the new European Commission, that China “must show its responsibility by being able to address thorny questions such as currency misalignment”.

Growth in China’s exports and imports last month exceeded expectations, providing new evidence of the vigour of the economy and strengthening the case for Beijing to let the yuan start climbing again.

On Monday, Olli Rehn, nominated to steer EU economic and monetary policy for the next five years, said in his parliamentary hearing that the exchange rate of the euro against the yuan was “a potential risk for European economic recovery”.

Last week, nominees for key U.S. Treasury international posts said they must work to persuade China to change its currency practices, or there could not be critical adjustments to global trade and economic balances.

But China has shrugged off pressure from its major trading partners for a change in the level of the yuan CNY=CFXS, repeating its line that stability was in everybody's best interest.

China overtook Germany as the world’s biggest exporter of goods in 2009, but analysts fear a strong acceleration in imports may heighten the chances of overheating, putting more pressure on Beijing to tighten its economic policy.

Exports from the Asian powerhouse leapt 17.7 percent in December from a year earlier, dwarfing the 4.0 percent rise forecast by economists and breaking a 13-month streak of year-on-year declines. Imports surged 55.9 percent, much more than the 31.0 percent increase markets had expected.

Most analysts said Beijing was unlikely to change its currency policy in response to one month’s figures, but some economists agreed that the yuan could start to rise around the end of March if exports remained strong. (Additional reporting by Jan Strupczewski)

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