BEIJING: Visiting French Prime Minister Francois Fillon today called for a more flexible yuan, saying such a policy would help boost

domestic consumption in China and resolve global trade imbalances.

The value of the Chinese currency, which has effectively been pegged to the

US dollar since mid-2008, has been a bone of contention between Beijing and its Western trading partners, which say it is kept low to boost exports.

“A progressive evolution towards a more flexible exchange rate policy would reduce the dependence of Chinese companies on international markets and help support the increased purchasing power of consumers,” Fillon said in a speech to students at Beihang University on the final day of his visit.

In the wake of the global economic crisis, which saw demand for Chinese exports plummet, Beijing has been trying to revamp its economic policy to make it less dependent on foreign demand and more grounded on domestic consumption.

Europe fears the euro’s rise against the yuan as a result of the dollar peg will hurt EU exports to China and slow the continent’s economic recovery.