The following article appeared in Bloomberg News yesterday.

Nov. 30 (Bloomberg) — European officials indicated that they failed to shift Chinese policies that peg the yuan to the dollar and reduce the region’s export competitiveness.

"I can’t say I’m more optimistic" about yuan appreciation, Jean-Claude Juncker, who chairs a group of euro-area finance ministers, said at a press briefing in Nanjing, China yesterday. Chinese officials had explained that it was hard to convince their public of the benefit of immediate gains, Juncker said.

 European leaders want China to loosen controls on the yuan that shelter Chinese exporters from the U.S. currency’s slide and expose the euro region to it. The euro has surged about 20 percent versus the U.S. currency since Feb. 18, making exports less competitive and undermining the region’s recovery from the worst slump since World War II.

"China will only adjust on its own terms and in its own time," said Glenn Maguire, chief Asia-Pacific economist at Societe Generale SA in Hong Kong. "It’s decided that now is not the time to do that."   

Both European Central Bank President Jean-Claude Triche and Juncker indicated at the briefing that no immediate change to China’s currency polices was likely. Chinese official confirmed that they will continue to implement currency reform begun in 2005, when a fixed exchange rate ended, Trichet said.  

Trichet told Bloomberg Television: "I don’t over-interpret our discussions. It is their decision and we will see."

                     ‘Very Difficult Point’

 In the past six months, the yuan has fallen 6.5 percent against the euro. China has kept its currency at about 6.83 against the U.S. dollar since July 2008.  

"An orderly and gradual appreciation of the renminbi would be in the best interests of China and the European economy,"Juncker said, using another term for the yuan. He said that the European Union and China had "not yet" reached an agreement on this "very difficult point of concern."   

Premier Wen Jiabao told the visiting officials that a stable yuan contributed to world financial stability and China would stick with a policy of gradually increasing the currency’s flexibility, Chinese state television reported. The yuan wil stay basically stable, Wen reiterated, urging the same for major world reserve currencies.   

The European officials met with Chinese National Development and Reform Commission Chairman Zhang Ping, People’s Bank of China Governor Zhou Xiaochuan, Finance Minister Xie Xuren and Premier Wen Jiabao.   

Juncker said the Europeans delivered their message about the currency in a "frank" way.

                         Obama’s Visit

 The officials’ visit comes after U.S. President Barack Obama left Beijing this month without a commitment to let the exchange rate strengthen. International pressure is growing on China after the Group of 20 nations, of which it is a member, agreed in September to make the world economy less reliant on Chinese savings and U.S. demand.  

"You shouldn’t expect the Europeans to have significant influence" on China’s currency, said Joerg Kraemer, chief economist at Commerzbank AG, Frankfurt. "Even the U.S. hasn’t managed it."   

Trichet told Bloomberg Television that rebalancing the global economy would also aid China’s "own stability and prosperity."

                           2010 Talks

    Obama told President Hu Jintao and Wen that the U.S. expects progress on making the yuan "more flexible" by mid-2010, according to Jon Huntsman, the American ambassador. That’s when talks between the U.S. State and Treasury secretaries and their Chinese counterparts will take place.

While China is focused on its domestic agenda and"unlikely to do anything" in response to international pressure, authorities may allow a "gentle appreciation" of the yuan next year before the U.S. Federal Reserve starts increasing interest rates, Societe Generale’s Maguire said.  

While the 16-member euro-region economy returned to growth in the third quarter, the euro’s ascent is making exports less competitive abroad and eroding companies’ earnings. European Aeronautic, Defence & Space & Co., the owner of Airbus SAS, said on Nov. 16 that third-quarter earnings slumped 77 percent partly because of a weaker dollar.

Juncker said that while the euro area is showing clear signs of an economic recovery, there will be no major withdrawal of fiscal stimulus measures in the region in 2010. Around the world, it’s too early to eliminate stimulus, he added.

Deutsche Telekom AG Chief Executive Officer Rene Obermann said on Nov. 5 the company is looking "very carefully" at developments in currency markets. The dollar’s depreciation and other exchange-rate movements cut third-quarter revenue at Europe’s biggest phone company by about 100 million euro compared to the second, spokesman Andreas Leigers said.