EUOBSERVER / BRUSSELS - An acrimonious EU-China summit on Wednesday (6 October) ended with a cancelled press conference and a stark warning from China not to increase pressure over its currency valuation.
"I say to Europe's leaders - don't join the chorus pressing [China] to revalue the yuan," Chinese Premier Wen Jiabao told a business forum taking place in the margins of the political summit in Brussels.
"Many of our exporting companies would have to close down, migrant workers would have to return to their villages," Mr Wen added. "If China saw social and economic turbulence, then it would be a disaster for the world".
The unscripted comments came a day after a trio of Europe's top economic officials including Eurogroup president Jean-Claude Juncker called on Beijing to allow the yuan to appreciate, arguing that its undervaluation threatened to derail the eurozone's economic recovery and indirectly hurt Chinese exporters.
Mr Juncker is among those warning that the world must step back from its current trajectory towards a 'currency war' where governments seek to give their exporters an upper hand through currency devaluations.
Already this year, governments from countries including Brazil, Japan, Switzerland, South Korea, Taiwan and Thailand have intervened to weaken their currencies in a bid to remain competitive.
Beijing announced in June that it would break the yuan's currency peg, but since then it has risen just over two percent against the dollar, and has fallen more than nine per cent against the euro.
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