China and India say the future of European growth hinges on Asian development
New Delhi (AsiaNews/Agencies) – After the difficult meetings between China and the European Union, the president of the EU Commission Jose Manuel Barroso is due to meet with the Indian president Manmohan Singh today in New Delhi for discussions on trade and investment. India is in need of foreign investment to encourage development and the EU hopes to obtain in exchange a free trade area by 2008. with the reduction of the barriers imposed by New Delhi on foreign goods and services to protect its internal industry.
Today’s meeting is taking place in the aftermath of the EU-China “clash” over currency and trade. Europe, which is China’s major commercial partner is concerned by the growing trade gap with Beijing (which is climbing at a rate of 20 million dollars an hour and is set to reach 170 billion by th years end) and is urging revaluation of the Yuan. But following talks, premier Wen Jiabao repeated that the Yuan-renminbi will only “gradually” regain flexibility, excluding any immediate intervention, further frustrating the President of the Central European Bank Jaen-Claude Trichet who had hoped the question would be at least “examined”.
Since July 2005 the Yuan has appreciated by 9.7% against the dollar but has lost 11% against the Euro, making European products less competitive compared to those from the United States and Japan and aggravating the commercial deficit.
The EU argues that the artificial undervaluation of the Yuan (estimated to be between 20-25%). The Yuan’s drop ``is creating a lot of problems for the European economy, and as a result protectionist reactions could occur,'' claims Luxembourg Prime Minister Jean-Claude Juncker. But the EU high commissioner for trade Peter Mandelson belives it is imperative to follow talks and said that “I arrived in Beijing unhappy and leave more encouraged”. They also want Beijing to tighten its intellectual property protection laws to create a more level playing field.
Analysts observe that the growing Asian economy is fundamental for European growth, which cannot afford to be left behind. Frank Gong, chief China economist at JPMorgan Chase & Co. in Hong Kong says ``Pressure is building internally in China, faster appreciation is an inevitability”.
Meanwhile Beijing is “earning” political concessions: Portuguese Prime Minister Jose Socrates said at a joint briefing with Wen that European Union leaders opposed Taiwanese President Chen Shui-bian's plan to hold a referendum on whether the island should seek to rejoin the United Nations under the name of Taiwan, backing Beijing's position.. In the briefing, Wen also reiterated the Dalai Lama is seeking independence for Tibet and asked European Leaders not to receive him.
Experts observe that major issues left out of the talks include the ban on selling arms to China (instituted after the Tiananmen Square massacre in 1989) and human rights, dominant issues less than a year ago. (PB)
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