EU and China look to boost ties amidst currency row (1st Lead)

Oct 6, 2010, 15:28 GMT

Brussels - The European Union and China looked to boost their cooperation on Wednesday at a summit in Brussels, despite an ongoing dispute over China's exchange rate policy.

The EU sees China as a potential strategic partner in Asia, and is eager to boost its influence in Beijing.

'We want to move this relationship forwards in the years to come: the EU and China have a strategic partnership of the utmost importance,' the president of the council of EU member states, Herman Van Rompuy, said as he opened the summit.

Chinese premier Wen Jiabao said that the summit, the thirteenth of its kind, should move to make progress on concrete problems.

'Between China and the EU, there is still a number of major issues that have been unresolved for a long period of time. This is not in keeping with the fundamental interests of both sides,' he said in an opening statement broadcast from the summit room.

China is the EU's second most important trading partner, after the United States, and a key player in world negotiations on issues ranging from climate change to economic reform. The EU is therefore keen to enlist its support for initiatives in those areas.

The two sides must 'work together to overcome the global challenges of today and tomorrow ... With great power comes great responsibility,' said the head of the EU's executive, Jose Manuel Barroso, in his opening remarks to the summit.

But the EU is at odds with China over its exchange rate policy. In June, China promised to let the yuan begin to move, but on Tuesday, eurozone leaders said that the currency had not yet moved enough.

'The evolutions in terms of the effective exchange rate ... were not exactly what we would have hoped ourselves,' European Central Bank head Jean-Claude Trichet said after talks with Wen.

Wen appeared to brush off the comments, telling an EU-Asia summit on Monday and Tuesday that it was important to keep the exchange rates of the major currencies stable. Despite that clash, Barroso said that he was 'confident that the discussion in the summit will be open and substantive and bring us one step closer to achieving our common goals.'

Barroso made that comment as he opened a cultural meeting of Chinese and European academics and intellectuals ahead of the summit.

Cultural exchanges are expected to be one of the major topics of conversation at Wednesday's summit, which is due to designate 2012 as the year of EU-China cultural dialogue.

'Different geographies have nurtured a variety of cultures, each with unique features and attributes. They are like the shining stars in the sky, adding radiance to each other and illuminating the vast universe,' Wen told the cultural meeting.

The summit is also due to touch on issues such as negotiations on a sweeping political partnership agreement which were launched in 2007, and worldwide talks on economic reform and climate change.

However, the currency issue is likely to prove contentious: the EU holds that China is keeping the yuan unfairly cheap to boost exports at the expense of imports, while Wen has repeatedly insisted that China will not brook interference in its economic policy.

The two sides could also clash over human rights. The EU has regularly condemned Chinese policies, such as its use of the death penalty and its detention of political activists. Beijing sees such comments as meddling in its internal affairs.

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