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I use python 2.7.6 on win32.
If I enter u'\u010d'.encode('utf-8') to console, I get '\xc4\x8d' as response. That's correct.
But it I use C API for the same, I get incorrect '\xc3\xa8' as response. 
I was testing it on this program:
#include <Python.h>
int main() {
Py_Initialize();
PyObject* dict = PyDict_New();
PyRun_String("u'\u010d'.encode('utf-8')", Py_single_input, dict, dict);
Py_DECREF(dict);
}