The summit meeting in Brussels on Wednesday saw some verbal tussling as China warned the EU to stop pressuring for a revaluation of the yuan and as the EU, in its turn, took China to task for a number of transgressions aside from currency, such as counterfeiting, theft of technology, clamping down on rare earth exports and discriminating against foreign companies.
According to a Reuters report, Chinese premier Wen Jiabao told the EU that a swift change in currency valuation could bring social turmoil. Instead, he said EU leaders should look at the U.S. dollar to explain fluctuations in the euro’s exchange rate. He also said that the trade surplus China holds against the U.S. was a result of “specific structures of the two economies,” and not because of the exchange rate with the yuan.
In his refusal to speed currency reform, Wen said, "Many of our exporting companies would have to close down, migrant workers would have to return to their villages. If China saw social and economic turbulence, then it would be a disaster for the world."
The U.S. and EU have been trying to get China not just to act on its currency, but also on a number of other issues. Karel de Gucht, EU trade commissioner, said that China would have to address these to achieve “market economy” trade status with the EU before it automatically is granted in 2016. De Gucht told Le Monde that "This question must be considered on the basis of clear commitments, for example, on access to the Chinese market, public procurement, protection of intellectual property and even the exchange rate."
Also on Wednesday, the EU also signed a trade agreement with South Korea, after announcing Tuesday that it had begun negotiations for a similar agreement with Malaysia.
While the U.S. urged the EU to put pressure on China regarding intellectual property rights and foreign investment, its efforts to get EU agreement to impose sanctions on the currency issue met with dissent. Marc Stocker, from the main EU industry umbrella group BusinessEurope, said Europe should not join with the U.S. Congress in imposing trade sanctions on China if it does not adjust its currency. "Trade retaliation is, as such, not a good response," he said in a statement.