China should let its yuan currency appreciate to help ease imbalances in the global economy, European Economic and Monetary Affairs Commissioner Olli Rehn said on Saturday.
The yuan, or renminbi, is pegged to the U.S. dollar and European policymakers generally believe it is undervalued, giving China a trade advantage and creating savings and trade imbalances across the globe.
We are of the opinion that it would be important that China would consider reforms in this respect so that we could see a certain rebalancing in the value of the renminbi, Rehn told reporters after a meeting of EU finance ministers.
It would be very important for the global economy and also for the Chinese economy. It is one of the issues that is very strongly on the global agenda -- it is a matter of agreeing at first at the G20 and we are in the process of doing this.
In notes prepared for EU delegations for a meeting of finance ministers and central bankers from the Group of 20 countries in Washington on April 23, the EU calls for more yuan appreciation.
China will have to remove obstacles to stronger domestic consumption: this may include a more extensive social safety net, measures to reduce corporate retained profits, and financial market and supervisory reforms. This should also be accompanied by an effective real appreciation of the renminbi, the document on the common EU position said.
(Reporting by Jan Strupczewski, editing by Dale Hudson)