A falling euro is putting pressure on Chinese exports and competitiveness. Domestic consumption is up but Beijing is not planning to revalue its currency any time soon.

Beijing (AsiaNews/Agencies) – A sharply falling euro following the Greek crisis and doubts over other European members threatens China's exporters as their goods become relatively more expensive to buyers in the Old Continent. Yesterday, the yuan rose to a seven-year high of 8.3587, after gaining about 14.5 per cent in the past four months.

Beijing has pegged the yuan firmly to the US dollar since the middle of 2008, resisting international pressure to appreciate its currency further, claiming that a stable yuan is good for China’s economic recovery and thus the entire the world.

However, a weaker euro will increase cost pressure on Chinese exporters and have a negative impact on China's exports to EU countries, its biggest export market, Foreign Ministry Yao Jian said.

A yuan pegged at fixed rate with the US currency has drawn criticism; however, “We should not politicise the yuan issue,” Yao said. “It is China's own business. Yuan appreciation is not the way to rebalance the global economy”. What is more, "Various parties including those in academic and industrial circles have reached a consensus that the yuan exchange rate policy isn't the source of the Sino-US trade surplus, nor is it the root cause of global imbalances," he said.

China in fact experienced a trade deficit in March, a first in six years. Hence, "Monthly figures this year will hover at either side of the balance point," Yao said, and the full-year trade surplus is likely to "fall sharply". This is partly due to increased domestic demand and higher commodity costs in 2009 and the first four months of this year.

• china
• european
• union
• trade
• euro
• exchange
• rate
• decline