China urges Europe to work on its debt

China is willing to help, but everyone has limits. Premier Wen Jiabao told visiting German Chancellor Angela Merkel at a state visit in Beijing on Thursday that Beijing plans to continue buying European sovereign debt, the strongest sign of support for its biggest trading partner in months, although it urged further measures to be taken.

“The European debt crisis has continued to worsen, giving rise to serious concerns in the international community. Frankly speaking, I am also worried,” Wen told reporters after the meeting.

Wen called on Greece, Spain and Italy to embrace budget cuts and get their finances in order. He said the second biggest world economy remains confident in the future of the euro and would seek closer ties with the European Union, the European Central Bank and the International Monetary Fund (known as the troika) to help struggling EU nations.

“Resolving the European debt problem requires fiscal tightening and finding balance within individual economies,” Wen said.

UNUSUALLY STRAIGHTFORWARD MOVE

This is an unusual statement for a Chinese leader. The big dragon always insists that governments should not interfere in each other’s affairs (note its policy on Syria or Sudan, for example). But this is different for the Chinese: Communist Party leaders are increasingly worried about the safety of their European debt holdings. Europe’s downturn has also battered China’s exporters, wiping out thousands of manufacturing jobs. In addition to this, Europe is a key market for expanding Chinese companies.

China Central Bank Governor Zhou Xiaochuan said Beijing would continue buying European government debt in February, but various Chinese agencies, including the sovereign wealth fund, countered the remarks by saying such investments were not wise due to risks, Reuters informs.

About the Author

Ana Fuentes
Ana Fuentes is The Corner Editor-in-Chief. Currently based in Madrid, she has been a correspondent in New York, Beijing and Paris for several international media outlets such as Prisa Radio, Radio Netherlands or CNN en español. Ana holds a degree in Journalism from the Complutense University in Madrid and the Sorbonne University in Paris, and a Masters in Journalism from Spanish newspaper El País. You can contact her at: anaf[at]thecorner.eu

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