Belgium's Reynders Urges Yuan Revaluation Within Six Months

``I'm hoping it will be possible for them to do something in the first part of the year,'' Reynders said in an interview in New York yesterday. ``I'm convinced we need to have the same approach in the U.S. and Europe about that.''

China views last July's revaluation as ``a cautious step,'' Commerce Ministry analyst Liang Yanfen said today. He predicted that political pressure will mount on China as long as the trade surplus remains high.

China's surplus tripled to a record $102 billion in 2005, spawning complaints from the U.S. and Europe that the government is using an undervalued currency to favor exporters.

China last July ended a decade-old currency peg and let the yuan gain by 2.1 percent versus the dollar. This month the government began using market prices to set the currency rate, another step toward a more flexible system.

The yuan today posted its biggest advance against the dollar since the July move. It strengthened to 8.0601 against the dollar in the exchange-traded interbank market, from the reference rate of 8.0648 set before start of trading.

The 25-nation European Union last year limited imports of Chinese clothing including shirts, trousers and bras to protect domestic manufacturers. It's also planning compulsory labeling to distinguish imports from European made products.

European Growth

Flagging economic growth and high unemployment has spurred calls in Europe for protectionist measures. Belgian Prime Minister Guy Verhofstadt said in a separate interview yesterday that he will miss a goal of creating 200,000 new jobs by 2007.

Against that backdrop Reynders said he wanted to avoid the two European Central Bank interest rate increases predicted by economists this year.

``I hope that won't be the case,'' Reynders said. ``If it is the case we will manage it in the budget'' to ensure that Belgium avoids a deficit for a seventh straight year.

The central bank last month increased its benchmark lending rate for the first time in five years to contain inflation. The median forecast of 18 economists surveyed by Bloomberg is for an increase to 2.75 percent by the end of 2006 from 2.25 percent now.

Reynders backed Germany's Juergen Stark to join the ECB's six-member executive board when a fellow German steps down in May. Stark is the only candidate for the position.

``He's a very good candidate and I don't have any problem with his candidature,'' Reynders said.

Stark, 57, was nominated by the German government last month to fill the ECB seat being vacated in May by countryman Otmar Issing, known as one of the central bank's toughest inflation fighters.