A gradual, orderly rise in the yuan against all major floating currencies is in the interest both of China and of the world economy, senior euro zone officials said on Sunday.
Luxembourg Prime Minister Jean-Claude Juncker, who chairs the Eurogroup of euro zone finance ministers, said he understood why China had halted the appreciation of its currency during the global credit crunch.
Nor was there a need for a dramatic rise in the yuan's exchange rate from one day to the next, Juncker told a news conference in the eastern Chinese city of Nanjing.
But, speaking after a day of talks with Premier Wen Jiabao and other senior Chinese officials, he said it was tough to justify the yuan's recent depreciation against a basket of currencies in light of China's fast economic growth and bulging external surpluses.
European Central Bank Governor Jean-Claude Trichet said Chinese officials had promised to keep implementing the currency reforms launched in July 2005, when Beijing ended a peg to the dollar and said it would let the yuan float in a managed band with reference to a basket of currencies.
The yuan rose 21 percent in total against the dollar in the following three years until China effectively repegged the exchange rate last July around 6.83 per dollar to help its beleaguered exporters.
Juncker said Chinese officials had explained that it was tough to convince their domestic audience to back an immediate resumption of the yuan's rise. And Trichet said he did not read recent comments by the Chinese central bank as suggesting such a move was imminent.
But Joaquin Almunia, the EU's commissioner for economic and monetary affairs, said the euro zone delegation had been told that an eventual resumption of the yuan's appreciation would be part of China's strategy to pull back from the pro-growth policy stance it adopted a year ago.
(Reporting by Simon Rabinovitch and Chris Buckley; Writing by Alan Wheatley; Editing by Mike Nesbit)