Nov. 16 (Bloomberg) -- Europe's trade deficit with China surged 25 percent in the eight months through August, giving European and U.S. officials more reason to pressure China to let its currency trade freely.

The euro-area trade gap with China widened to 70 billion euros ($102 billion) from 55.9 billion euros in the year-earlier period, the European Union's statistics office in Luxembourg said today. China's yuan has dropped 7 percent against the euro in the last year, fueling tension over the growing imbalance.

An EU delegation led by European Central Bank President Jean-Claude Trichet is due to visit Beijing Nov. 27, when it plans to tell China it risks ``triggering protectionist tendencies'' because of the currency, according to a draft of a confidential briefing document. Europe and the U.S. also will push the issue at a meeting of officials from the Group of 20 nations near Cape Town this weekend.

``There is a point of agreement between the Europeans, the Americans and the Japanese on the Chinese yuan,'' said Dominique Barbet, an economist at BNP Paribas in Paris. ``But even if Chinese authorities do revalue over a period of time, this will not greatly change the competitive position of China.''

China's export growth is dominated by products including electronics, toys and textiles, while euro-area economies such as Germany, the region's largest, are reliant on machinery and heavy equipment, according to Barbet, lessening competition between the economies.

`Major Concern'

While China abandoned the yuan's strict peg to the dollar two years ago, the government continues to control the exchange rate. Bank of England Governor Mervyn King said on Nov. 14 that the refusal of China to allow the yuan to trade freely is a ``major concern.''

Trichet insisted last week that China meet its ``global responsibilities,'' and U.S. Treasury Secretary Henry Paulson called Beijing ``out of step with the rest of the world.'' Luxembourg Prime and Finance Minister Jean-Claude Juncker, who will accompany Trichet to Beijing, sees the Chinese yuan undervalued by up to 25 percent, Luxembourg's 100.7 radio station reported today, citing an interview.

While China remains a focal point for EU attention, a bigger issue may be maintaining export growth in the face of a cooling U.S. economy.

The U.S.'s biggest housing slump in 16 years is threatening to spill over to other industries in the world's largest economy and curb growth there. European exports to the U.S. fell 1 percent in the eight months through August from a year earlier, according to today's figures.

`More Difficult'

``It seems inevitable that euro-zone exporters will find life ever more difficult over the coming months,'' said Howard Archer, chief European economist at Global Insight in London. The euro has risen to ``new highs and global growth is coming under increasing pressure from the credit crunch and record high oil prices.''

An index of export orders fell to a 29-month low in October, according to a monthly survey of European manufacturers. A gauge of industrial confidence also declined, a separate report showed.

The euro's gains against other currencies, including the yuan and the U.S. dollar, may compound a downturn by making European goods less competitive abroad. The dollar has slumped 13 percent against the euro in the last year, falling to a record low $1.4752 Nov. 9, while the yen has fallen almost 7 percent.

Measured against an index of the euro area's 24 main trading partners, the euro has risen 6 percent in that period.

`Doing Well'

So far, exports are holding up. Exports to Poland have jumped 22 percent in the January-August period from a year earlier, while sales to the Czech Republic gained 18 percent. Exports to the U.K., the euro area's biggest trading partner, increased 6 percent.

``Exports are still doing well, largely thanks to Germany, which is concentrated on goods that are not much price sensitive,'' said Barbet at BNP. Exports of machinery and vehicles rose 9 percent in the eight months from a year earlier, according today's figures.

The figures show that the euro area bought 21 percent more goods from China in the January-August period than it did a year earlier. That growth is faster than the 14 percent increase in exports to the Asian nation.

The euro region posted a seasonally adjusted trade surplus of 3.9 billion euros in September, compared with a 4.5 billion- euro surplus in August. The aggregate data is published a month ahead of the figures for individual trading partners.

To contact the reporter on this story: Fergal O'Brien in Dublin at fobrien@bloomberg.net.

Last Updated: November 16, 2007 08:58 EST