Thursday

4th Mar 2021

EU-China summit ends in discord

  • Mr Van Rompuy (l) and Mr Wen. There are increased warnings that the world is headed for a currency war (Photo: consilium.europa.eu)

An acrimonious EU-China summit on Wednesday (6 October) ended with a cancelled press conference and a stark warning from China not to increase pressure over its currency valuation.

"I say to Europe's leaders - don't join the chorus pressing [China] to revalue the yuan," Chinese Premier Wen Jiabao told a business forum taking place in the margins of the political summit in Brussels.

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"Many of our exporting companies would have to close down, migrant workers would have to return to their villages," Mr Wen added. "If China saw social and economic turbulence, then it would be a disaster for the world."

The unscripted comments came a day after a trio of Europe's top economic officials including Eurogroup president Jean-Claude Juncker called on Beijing to allow the yuan to appreciate, arguing that its undervaluation threatened to derail the eurozone's economic recovery and indirectly hurt Chinese exporters.

Mr Juncker is among those warning that the world must step back from its current trajectory towards a 'currency war' where governments seek to give their exporters an upper hand through currency devaluations.

Already this year, governments from countries including Brazil, Japan, Switzerland, South Korea, Taiwan and Thailand have intervened to weaken their currencies in a bid to remain competitive.

Beijing announced in June that it would break the yuan's currency peg, but since then it has risen just over two percent against the dollar, and has fallen more than nine per cent against the euro.

Tensions

Other thorny issues during the day of talks in Brussels included an EU call for improved market access for its businesses in China, together with progress on human rights.

As finance ministers prepare to attend this week's IMF annual meeting, EU leaders Herman Van Rompuy and Jose Manuel Barroso said they fully supported reform of the international lending organisation to give greater weight to emerging powers - a key request from Beijing.

But in an apparent reference to their unhappiness with current Chinese policies, the two said in a joint statement that "enhanced representation should go hand in hand with enhanced responsibilities in global governance."

A press conference scheduled to take place after the summit was cancelled, officially for scheduling reasons, but sources indicated the decision was related to the degree of divergence between the European and Chinese positions on the topics discussed.

"We realised during the talks there may have been little to say [in the press conference]," one diplomat told AFP.

Others suggested the Chinese side had called for the cancellation, fearing that a number of Chinese journalists were preparing to ask awkward questions.

"It is a very strange thing and it is very suspicious," Lorenzo Consoli, President of the International Press Association (IPA) in Brussels, told The Epoch Times.

"I think it is quite likely that actually there was very strong interference by the Chinese delegation on the EU organisation, in order to block access to independent Chinese media to the final press conference of the EU-China summit," he added.

Prior to the cancellation, four reporters from the The Epoch Times and New Tang Dynasty Television were reportedly denied entry to European Council building before eventually being allowed in.

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