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China offers EU a helping hand

Jun 28 2011 17:28 Reuters

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Berlin - Chinese Premier Wen Jiabao offered Europe a "helping hand" with its debt crisis during a visit to Germany on Tuesday, and said his country could buy the sovereign debt of some troubled eurozone nations if needed.

"China has expressed support for Europe at various times. In other words, when Europe is in difficulty we will extend a helping hand from afar," the Chinese prime minister told a joint news conference with German Chancellor Angela Merkel.

"We will according to need definitely purchase certain amounts of sovereign debt," said Wen, who described the problems of highly indebted eurozone countries like Greece as being of only a "temporary nature".

As on previous occasions when talking about eurozone debt, Wen did not give specific figures on potential purchases, nor which countries' debt China might purchase.

Capital Economics estimated in a research note that China bought more than €40bn of euro-denominated assets this year, much of that in peripheral economies.

The German leader said China has a "massive" interest in a stable euro though some policymakers, such as European Central Bank (ECB) board member Juergen Stark, have cautioned against seeing China as the "rescuer" of the common European currency.

The EU and International Monetary Fund (IMF) are putting pressure on Greece to give political backing to a tough austerity programme, to qualify for ongoing aid and work out a second bailout meant to tide it over after 2012.

About a quarter of China's record foreign currency reserves of more than $3 trillion are estimated to be held in euro assets, and China has reiterated its confidence in the euro since the debt crisis began.

Wen visited Germany on the final leg of a European tour taking in Hungary and Britain. It was the first time China and Germany - the world's two biggest exporting nations - had held full ministerial consultations aimed at boosting trade.

A day before Wen left for Europe, China released artist Ai Weiwei on bail in a move analysts have said should not be interpreted as a policy shift by the ruling Communist Party.

Merkel told Tuesday's news conference she welcomed the release, but wanted China to ensure fair legal treatment for Ai and recently released dissident Hu Jia, as well as more press freedom.

A Brussels think-tank, the European Council on Foreign Relations, said China's new effective status as "a lender of last resort" had "serious implications for Europe's ability to present a united front to China" on such issues.

Dependent on China

Wen said the main point of the bilateral meeting was to "boost the growth potential of bilateral trade ... and to once again double our bilateral trade volume in five years".

He said deals worth more than $15bn were signed by Chinese and German firms during the visit. Airbus signed a deal with China Aviation Supplies and an aircraft leasing arm of China's ICBC bank for the delivery of 88 A320 planes, with a list price of $7.5bn.

A separate Chinese Airbus deal worth $3.8bn for superjumbos had previously been delayed in protest at EU carbon emissions trading rules, industry sources say.

Merkel said she expected bilateral trade to reach about €200bn over that period, from €130bn in 2010 when trade had already surged 34% on the previous year.

Britain and China signed deals worth $2.3bn during the premier's visit there on Monday.

Germany hopes for a rebalancing of investments between the two countries, with Germany's direct investments in China now standing at €20bn euros compared to Chinese investments in Germany of only about €600m, German officials said.

A German television channel ran an unscientific telephone poll during Wen's visit to Berlin and 81% of Germans who responded said their country was growing "too dependent" on China.

But German Foreign Minister Guido Westerwelle said China's rapid growth and burgeoning influence on the world stage "need not be at Germany's expense but to our benefit" if his country managed it cleverly, though he acknowledged there were differences between the two governments on human rights. 

wen jiabao  |  china  |  greece  |  europe debt crisis
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