MercoPress. South Atlantic News Agency

Europe asks China for more financial “responsibility”

Euro-zone finance ministers urged China to bear more “responsibility” for global financial stability as they prepared a top-level mission to lobby Beijing about its runaway trade surplus with Europe.

European Finance ministers are growing increasingly concerned about booming imports from China as they also struggle to cope with the record strength of the euro and oil prices. "China is the fourth economic power in the world and has therefore considerable responsibility when it comes to coordinating economic and financial policies on a global scale" said Jean-Claude Juncker, chairman of regular meetings of Euro-zone finance ministers. Juncker, also Luxembourg's finance minister, is due in Beijing on November 27 along with European Central Bank chief Jean-Claude Trichet and EU Monetary Affairs Commissioner Joaquin Almunia to share such concerns with Chinese authorities. Their meeting is on the eve of an EU-China summit in Beijing, which is expected to focus in part on increasingly strained trade relations. China on Monday reported that its trade surplus in October topped 27 billion dollars for the first time, adding mounting pressure by the US and EU over Chinese trade policies. Finance ministers in the 13 nations sharing the Euro are increasingly frustrated that China is not letting the state-controlled exchange rate of the Yuan appreciate faster, boosting booming Chinese exports. "We want to discuss economic developments in China and Europe and deal with any macroeconomic issues that might be relevant, including exchange rate policies," Juncker told journalists after chairing the talks. French Finance Minister Christine Lagarde stressed that it was ultimately in China's interest to rein in its trade surplus and allow the Yuan to appreciate more freely. "We all agreed that it is probably useful to each of us, including the Chinese, to reorient Chinese growth towards the domestic market while also re-valuing the Yuan, which would be good for everybody," she said. China, which has allowed the Yuan to rise about 10% since it de-linked the Yuan from the US dollar in 2005, has resisted calls for more rapid appreciation. The issue is all the more irking for the Euro-zone because the bloc's exports are increasingly struggling to compete on international markets as result of the Euro's record strength. "The Euro's level is a bit too high. It's true that its volatility worries us," said Spanish Finance Minister Pedro Solbes. "A stronger dollar and a rebalancing of the Asiatic currencies are needed." But not all agree: Dutch Finance Minister Wouter Bos said: "the Euro reflects the confidence that people have in the European economy, which means we are doing well." Michael Deppler, director of the European Department at the IMF said in London he did not "see a problem, or at least (not) a big problem" with the Euro strength, which "remains in a range where the economy is functioning well." As a result, he saw no need for the ECB to intervene in foreign exchange markets to rein in the strength of the Euro, which last week repeatedly marked new record highs against the dollar.