Europe’s incoming trade commissioner lashed out on Tuesday at what he said was a “deliberate” policy by China of keeping its currency undervalued, in a remark sure to irritate Beijing.
Warning that China’s foreign exchange stance posed a “major problem” for global economic recovery, Belgium’s Karel De Gucht highlighted growing EU unease on the issue.
His criticism of China’s effective peg of the yuan to a weak dollar and how it undercuts European exporters came after a confirmation hearing before lawmakers in Brussels.
PHOTO: REUTERS
“It is obvious that the undervaluation of the Chinese currency is a major problem,” De Gucht said.
“It is clear to me that this is a deliberate policy and we should address this on all possible occasions, bilaterally and also multilaterally,” he said.
De Gucht had already warned that China “must show its responsibility” and “address thorny questions, such as currency misalignment.”
His comments come amid increasingly sour trade disputes with China over products ranging from shoes to screws.
Chinese Premier Wen Jiabao (溫家寶) said last month that international pressure over China’s currency policy was “unfair,” with Beijing insisting that it has done more than its fair share to get the global economy back on its feet.
The Asian giant’s exports soared 17.7 percent last month to see it overtake Germany as the world’s biggest exporter, illustrating how its economy has got through the slump better than most.
Its trade partners, especially the US and the EU, have long complained that a weak currency gives China an unfair trade advantage at their expense.
De Gucht said another “primary focus” would lie in breaking down US “barriers behind the border, predominantly owing to differences in regulation.”
He also dismissed French-led calls to impose a carbon tax at EU frontiers, saying such a levy risked triggering “an escalating trade war on a global level.”
On the stalled WTO negotiations for global trade liberalization in the Doha round, De Gucht said he was “personally confident” a deal could finally be reached “in 2010 or 2011.”
More broadly, he said he would seek as a rule to manage his new brief without compromising human rights, climate or labor issues while seeking the EU’s core economic growth objective “in a sustainable way.”
To that end, he wanted to protect EU companies’ roles in an global green economy so as to avoid the bloc losing out on key technologies as production migrated oversees, as had happened with microchips.
A majority of the deputies attending the hearing agreed at a subsequent meeting to support De Gucht’s nomination.
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