Wen told an EU-China business forum on the sidelines of a summit with EU leaders that European leaders should turn to the U.S. dollar for an explanation of the fluctuations in the exchange rate of the euro. China's trade surplus against the United States was due to the specific structures of the two economies, not the yuan exchange rate, he said.

A sharp appreciation of the yuan, also known as the renminbi, could lead to social unrest in China, with severe consequences for global stability, the Chinese Premier said.

However, he stressed Beijing would implement reform of its exchange rate regime of its non-convertible currency which would lead to a gradual rise. "Do not work to pressurize us on the renminbi rate," the premier said, departing from a prepared speech. "Yes, we are going to proceed with the reforms."

He noted that a U.S. congressman had predicted social unrest in China if there was a rapid rise in the yuan exchange rate. "If China saw social and economic turbulence, then it would be a disaster for the world," Wen said. "Many of our exporting companies would have to close down, migrant workers would have to return to their villages."

Reuters