–Adds More Quotes, Background

BRUSSELS (MNI) – China must make good on its G20 commitment to
relax control over its currency, the renmimbi, thus allowing it to
appreciate, European Central Bank President Jean-Claude Trichet said on
Tuesday as Europe’s policymakers stepped up their pressure on the
Chinese authorities.

“We clearly have communicated, as the Prime Minister [Jean-Claude
Juncker] and [European Commissioner for Economic and Monetary Affairs]
Olli Rehn said, that it was very important for us that the commitment
made on the 19th of June would be confirmed, which, as far as I
understand, has been the case,” Trichet told reporters at a press
conference.

In June this year, China’s authorities said they would reform their
exchange rate policy to make the currency more flexible.

Trichet was speaking after talks with Chinese Premier Wen Jiabao,
Rehn and Juncker in Brussels on Tuesday.

The European policymakers today and in other meetings this week
with the Chinese delegation stressed their view that the Chinese
renminbi is heavily undervalued compared to the euro.

“I consider it extremely important that the major floating
currencies are floating,” Trichet said.

“I would say the following, we are – between the major floating
currencies – in a floating system and when we have something to say in
the floating system, we say it,” Trichet added.

Rehn said that if the Chinese currency isn’t revalued it could
hamper Europe’s recovery. He said Europe wants to see a “broad based
appreciation of the renminbi.”

“This would be in our view, first and foremost in the interest of
China,” he said.

Juncker, who heads the Eurogroup, said the “economic recovery in
the euro area has recently gained ground” but that policymakers expected
it to slow in the second half of the year.

He said China’s recent growth was important in supporting the
global recovery but that the inflexible exchange rate was contributing
to misalignment.

Rehn and Trichet said they had expressed their appreciation to
Prime Minister Wen for his support of some Eurozone treasuries.

“We have appreciated the intention and the declaration of the
[Chinese] Prime Minister in particular on his confidence in treasuries
of some countries in Europe,” Trichet said.

Wen didn’t attend the press conference on Tuesday but said on
Monday in Brussels that the major reserve currencies should remain
“relatively stable.”

–Brussels: 0032 487 (0) 32 803 665, echarlton@marketnews.com

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