Wen met on the sidelines of an Asia-Europe Meeting (ASEM) with the head of eurozone finance ministers, Jean-Claude Juncker, European Central Bank head Jean-Claude Trichet and European Union economic affairs chief Olli Rehn. "China's real effective exchange rate remains undervalued," Juncker told a news conference after the talks. "Orderly, significant and broad-based appreciation of the renminbi would promote a more balanced growth to the benefit both of China and the global economy," he said. Europe and the United States have long accused Beijing of deliberately keeping the yuan artificially low to boost exports, causing a huge trade imbalance which many analysts say was a factor behind the global financial crisis. China had effectively pegged the yuan at about 6.8 to the dollar for the past two years to prop up exporters during the global financial crisis. In recent remarks in the United States, Wen acknowledged that a big rise of the yuan, by crimping Chinese exports, could stir incalculable social unrest in China. Juncker said after the meeting on Tuesday that China was "sticking" to a June 19 statement which had indicated that it would move on the renminbi exchange rate. European Central Bank head Trichet said that the Chinese engagements remained to be "confirmed," but said it remained "something that has to be appreciated during the next months." European Union Economic Affairs Commissioner Olli Rehn likewise called for "increased flexibility." The issue was high on the minds of Europe's top bosses during the ASEM summit taking place Monday and Tuesday. German Chancellor Angela Merkel herself said on Tuesday that "exchange rates have to be as realistic as possible." Many analysts believe the yuan remains vastly undervalued against the dollar -- some think it below its true value by as much as 40 percent -- despite the agreement under intense Western pressure to let it trade more freely. In a speech at the royal palace for a summit aimed at strengthening Europe's ties with Asia's emerging giants, Wen said "we must work together to promote world economic growth" but stood firm on the question of currency. "We should intensify macroeconomic policy coordination, manage with caution the timing and pace of an exit strategy from economic stimulus and keep the exchange rates of major reserve currencies relatively stable," he said. Juncker's spokesman, Guy Schuller, struck back saying the yuan was "totally undervalued." "This is contributing to global imbalances. We want China to assume its responsibilities as a world power," he said. Ween, the star guest of the talks gathering 46 nations, urged Europe to cede more power to emerging markets in international financial institutions. The appeal came amid complaints by emerging economies that Europe is over-represented at the International Monetary Fund. "We need to improve the decision-making process and mechanisms of the international financial institutions," Wen told fellow leaders. The Chinese premier said there was a need to "increase the representation and voice of developing countries, encourage wider participation and fully accommodate each other's interests and concerns". European finance ministers agreed last week to hold talks with the United States and other partners on reviewing EU representation at the Washington-based international lender. Europe, which holds nine IMF board seats, offered as part of a compromise to rotate two of its spots with emerging markets. A top official from South Korea, which will host the summit of G20 leaders in Seoul in November, welcomed the proposal as a "great improvement". "The Europeans show some flexibility and also offer some solutions," Changyong Rhee, head of the committee preparing the G20 meeting, told reporters in Brussels. Wen met on the sidelines of an Asia-Europe Meeting (ASEM) with the head of eurozone finance ministers, Jean-Claude Juncker, European Central Bank head Jean-Claude Trichet and European Union economic affairs chief Olli Rehn. "China's real effective exchange rate remains undervalued," Juncker told a news conference after the talks. "Orderly, significant and broad-based appreciation of the renminbi would promote a more balanced growth to the benefit both of China and the global economy," he said. Europe and the United States have long accused Beijing of deliberately keeping the yuan artificially low to boost exports, causing a huge trade imbalance which many analysts say was a factor behind the global financial crisis. China had effectively pegged the yuan at about 6.8 to the dollar for the past two years to prop up exporters during the global financial crisis. In recent remarks in the United States, Wen acknowledged that a big rise of the yuan, by crimping Chinese exports, could stir incalculable social unrest in China. Juncker said after the meeting on Tuesday that China was "sticking" to a June 19 statement which had indicated that it would move on the renminbi exchange rate. European Central Bank head Trichet said that the Chinese engagements remained to be "confirmed," but said it remained "something that has to be appreciated during the next months." European Union Economic Affairs Commissioner Olli Rehn likewise called for "increased flexibility." The issue was high on the minds of Europe's top bosses during the ASEM summit taking place Monday and Tuesday. German Chancellor Angela Merkel herself said on Tuesday that "exchange rates have to be as realistic as possible." Many analysts believe the yuan remains vastly undervalued against the dollar -- some think it below its true value by as much as 40 percent -- despite the agreement under intense Western pressure to let it trade more freely. In a speech at the royal palace for a summit aimed at strengthening Europe's ties with Asia's emerging giants, Wen said "we must work together to promote world economic growth" but stood firm on the question of currency. "We should intensify macroeconomic policy coordination, manage with caution the timing and pace of an exit strategy from economic stimulus and keep the exchange rates of major reserve currencies relatively stable," he said. Juncker's spokesman, Guy Schuller, struck back saying the yuan was "totally undervalued." "This is contributing to global imbalances. We want China to assume its responsibilities as a world power," he said. Ween, the star guest of the talks gathering 46 nations, urged Europe to cede more power to emerging markets in international financial institutions. The appeal came amid complaints by emerging economies that Europe is over-represented at the International Monetary Fund. "We need to improve the decision-making process and mechanisms of the international financial institutions," Wen told fellow leaders. The Chinese premier said there was a need to "increase the representation and voice of developing countries, encourage wider participation and fully accommodate each other's interests and concerns". European finance ministers agreed last week to hold talks with the United States and other partners on reviewing EU representation at the Washington-based international lender. Europe, which holds nine IMF board seats, offered as part of a compromise to rotate two of its spots with emerging markets. A top official from South Korea, which will host the summit of G20 leaders in Seoul in November, welcomed the proposal as a "great improvement". "The Europeans show some flexibility and also offer some solutions," Changyong Rhee, head of the committee preparing the G20 meeting, told reporters in Brussels. Source: AFP