Chinese and European leaders discussed economic issues such as liberalising the yuan on Thursday, though the European Union is not expected to take as tough a stance on the currency as the United States. European Commission President Romano Prodi has said he will seek a gradual loosening of the yuan's peg to the dollar, which some US manufacturers say makes Chinese exports unfairly cheap.

Prodi and other EU officials were meeting Chinese President Hu Jintao and Premier Wen Jiabao for an annual EU-China summit that was also expected to touch on geopolitical problems like Iraq, North Korea and Myanmar.

The summit comes on the heels of a visit to Beijing by US Commerce Secretary Don Evans, who pressed China to narrow its ballooning trade surplus with the United States by opening its markets faster to foreign goods and services.

It also comes a day ahead of testimony due to be given by US Treasury Secretary John Snow to Congress on whether China and other countries are manipulating their currencies in order to boost exports.

A spokeswoman for the European Commission embassy in Beijing said EU officials held a softer stance on the yuan than the United States.

"We are of the view that the burden of adjustment of global imbalances should be shared more widely and take place in an orderly manner, including through smooth exchange rate adjustments that reflect fundamentals," she said.

European and Chinese officials are also due to sign agreements on industrial policy, tourism and a Chinese role in the Galileo satellite global positioning system that is opposed by the United States.

China had a 47 billion euro ($53 billion) surplus with the 15-nation EU last year, according to EU figures. The surplus with the United States was $103 billion and is on track to top that this year.

However, China's total trade surplus is shrinking as imports, especially from other Asian nations, soar as the country buys raw materials and components to feed its busy factories.

On Wednesday, a European business group urged policymakers to press China to make its exchange rate regime more flexible and to reduce barriers to trade and investment.

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