People's Republic of China Deputy Foreign Minister Fu Ying. The Chinese government is very concerned about the economic crisis in Europe., a photo by Pan-African News Wire File Photos on Flickr.
Eurozone debt deal welcomed
Updated: 2011-10-28 08:02
By Li Xiang and Zheng Yangpeng (China Daily)
Hu: China hopes measures will stabilize world financial markets
BEIJING - China welcomed the deal on Thursday to tackle the eurozone debt crisis and expressed its willingness to help boost global economic recovery.
European leaders sealed a last-ditch agreement after days of negotiation. Their plan is to reduce Greece's debt by 50 percent and expand the European Financial Stability Facility (EFSF), the eurozone's bailout fund, to 1 trillion euros ($1.4 trillion) from 440 billion euros.
The European debt plan is "conducive to lifting market confidence" and China supported the measures adopted by the European Union (EU) to tackle the financial crisis, Foreign Ministry spokeswoman Jiang Yu said at a news briefing.
"The plan will promote the sustainable economic development of the EU and the eurozone, and will inject new vitality into European integration," Jiang said, adding that China was ready to increase cooperation with the EU in investment, trade and finance.
European nations are also looking to boost the EFSF fund through investment from cash-rich emerging economies such as China. But Jiang declined to comment on whether China would participate in Europe's special rescue fund.
On Thursday, President Hu Jintao spoke with French President Nicolas Sarkozy by telephone on global economic issues and next month's G20 summit in Cannes, France.
Hu told Sarkozy that he hoped the measures would "help Europe stabilize financial markets, overcome difficulties and push forward economic recovery and development", according to the Foreign Ministry website.
Hu said he also hoped that next week's G20 meeting would send a "strong signal to promote stability".
Analysts said that China should extend support to EU efforts to tackle the ongoing financial turmoil because it is threatening the demand for Chinese exports to the region. However, they said China should be cautious about the risk of investing in European sovereign bonds.
"China would like to see the EU find a solution toward sustainable recovery. But the specific method should be evaluated very carefully," said Zhang Yuyan, director of the Institute of World Economics and Politics with the Chinese Academy of Social Sciences.
Analysts said that China is unlikely to invest directly in European sovereign debt because of the high risk. But it has been reported that China may help the EU boost its bailout fund through the International Monetary Fund (IMF).
Zhong Wei, director of the Financial Research Center at Beijing Normal University, said that China's aid through the IMF is in line with European efforts to bolster the IMF's role in dealing with the regional economic woes.
"It will also help China gain a greater say in the global financial system," he said. But Zhong noted that the main concern for China is still whether the EU can act in unity.
"It is like a fire in a house. It is unreasonable for the owner to call his neighbor to put it out if the owner did not try to put it out first," he said.
However, some analysts said that aid from China would boost market confidence only in the short term and it would not solve the debt crisis.
"Money and debt write-downs cannot solve the Greek problem. Europe has to rely on itself to adjust the pattern of its economic growth and to deal with the structural problems in its economy," said Tan Yaling, head of the China Foreign Exchange Investment Research Institute.
Some experts argued that China's contribution to the bailout fund should be matched with rights, such as an increase in its voting quota at the IMF and recognition of its market economy status. Europe should also open its markets wider to facilitate more direct investment from China, they said.
Klaus Regling, chief executive of the EFSF, is scheduled to visit China on Friday to meet with buyers of bonds issued by the bailout fund and discuss how China might contribute to the fund.
(China Daily 10/28/2011 page1)