(1888PressRelease)
November 23, 2007 - Europe's trade deficit with China increased by 25 per cent in the eight months through to the end of August, the latest figures show.
As a result, European and US officials have been given more leverage in their argument than China should let its currency trade freely rather than keep it pegged against the dollar.
The euro-area trade gap with China now stands at €70 billion, up from €55.9 billion a year ago, the European Union's statistics office in Luxembourg has said.
This is of particular concern as in the same period China's yuan has dropped seven per cent.
Mervyn King, the governor of the Bank of England, has revealed China's reluctance to allow the yuan to trade freely is a "major concern", while US treasury secretary Henry Paulson says Beijing is "out of step with the rest of the world" as a result of its determination to continue with its policy.
However, Dominique Barbet, an economist at BNP Paribas in Paris, said the issue may be a moot point.
"There is a point of agreement between the Europeans, the Americans and the Japanese on the Chinese yuan,'' he told Bloomberg.
"But even if Chinese authorities do revalue over a period of time, this will not greatly change the competitive position of China."
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