China ready to help solve EU debt crisis

Discussion in 'World Affairs' started by Hu Songshan, Feb 21, 2012.

  1. Hu Songshan

    Hu Songshan INT'L MOD

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    China’s Premier Wen Jiabao said yesterday his country was ready to increase its participation in efforts to resolve Europe’s debt crisis, after holding talks with EU leaders in Beijing.
    Wen said China wanted to see Europe – its biggest trading partner – “maintain stability and prosperity”, a day after ratings agency Moody’s downgraded Italy, Spain and Portugal.
    “China is ready to increase its participation in resolving the EU debt problems,” the Chinese premier told journalists after meeting EU president Herman Van Rompuy and European Commission president Jose Manuel Barroso.
    China was considering using Europe’s bail-out funds to help address the continent’s fiscal woes, Wen added, without elaborating further on how the Asian power might be prepared to contribute.
    China has made clear its growing concerns over the crisis in Europe, repeatedly urging EU leaders to get a grip on the situation, which the foreign ministry said this week had reached a “critical juncture”.
    European leaders last year approached China, which holds the world’s largest foreign exchange reserves, to invest in a bail-out fund to rescue debt-stricken states.
    EU leaders will discuss in March whether to boost the size of the 500 billion euro European Stability Mechanism (ESM), the permanent rescue fund due to begin operating in July.
    Van Rompuy said he welcomed “the readiness of China to cooperate with the European Union in order to ensure the financial stability of the eurozone.
    “We have not just navigated a difficult bend, but we have turned a corner,” he added.
    Leaders of the 17-nation eurozone and eight other EU nations agreed last month to create a new fiscal pact requiring signatories to put balanced budgets into law.
    But Moody’s this week questioned whether Europe was pulling together adequate resources to deal with the crisis as it chopped the debt ratings of Italy, Spain and Portugal.
    The ratings agency also put France, Britain and Austria on warning, saying they were increasingly vulnerable to the eurozone crisis, which has brought Greece to the brink of bankruptcy and triggered violence in a number of cities.
    Wen’s comments came after the International Monetary Fund warned last week that an escalation of the EU debt crisis could slash China’s economic growth in half this year.

    Full market status

    The two sides also agreed during the talks to give fresh impetus to Beijing’s efforts to attain full market economy status for China, according to a joint communique issued after the summit.
    Beijing has long demanded that the European Union and United States accord China full market economy status, a technical designation that would remove certain restrictions to Chinese exports and investments in Europe.
    EU leaders say the Asian giant has not yet met the necessary conditions, pointing out that most of China’s largest companies are state-owned and their leaders appointed by the government.
    Wen pledged that China would improve its laws and regulation in relation to foreign investment, enhance protection of intellectual property and improve its investment environment.
    “China will continue to fully meet its World Trade Organization commitments,” he said. “It will continue to expand market access.”
    The two sides also discussed the crisis in Syria, after China and Russia vetoed a UN Security Council resolution condemning the regime’s bloody crackdown on protests, drawing international ire.
    “China will absolutely not protect any party, including the government in Syria,” Wen told reporters, as the international community warned of a humanitarian disaster in Syria.
    Since the crackdown was launched less than a year ago, more than 6,000 people have been killed, monitors say.
    Barroso and Van Rompuy will also hold talks with China’s President Hu Jintao today as part of the summit, which was originally due to take place in October, but had to be postponed due to the debt crisis.
     
  2. Hu Songshan

    Hu Songshan INT'L MOD

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    I have posted two other threads on this check them out if you can.
     
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  3. longyi

    longyi FULL MEMBER

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    It is to her own advantages to help solve the Euro debt crisis, but China must be careful though. The troika's ( EU, EU Central bank and IMF) impositions of strict austerity measures on nations that are on the verge of defaults might not be working. It is like adding debts on top of bad debts would never solve the underlying problems.

    Before China parts with her money she must carefully makes a list of strong demands that favor her and yet also help those Euro nations economically. Demands favorable trading concessions and certain equities that profit her. Demands the protections of her investments.

    That's how bankers operate and she is the banker.
     
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  4. Hu Songshan

    Hu Songshan INT'L MOD

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    Check out the other links I've posted for this.
     
  5. Chinese-Dragon

    Chinese-Dragon PDF THINK TANK: ANALYST

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    That's right. No one wants to see their largest customer collapse, that would not serve our interests at all.

    The Eurozone is an integral part of the world economy, if they go down, then the world economy goes down as well. How sad, that the entire global economy is so often held hostage by a handful of nations (not naming any specific ones here) that cannot handle their own economy.
     
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  6. Hu Songshan

    Hu Songshan INT'L MOD

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    We should get more trade deals for helping them.
     
  7. Hu Songshan

    Hu Songshan INT'L MOD

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    Yes thank you Longyi we will make sure we get our Demands and favorable Trade concessions including more influence in the EU.

    ---------- Post added at 01:06 PM ---------- Previous post was at 01:03 PM ----------

    http://www.defence.pk/forums/world-...nsiders-offering-aid-europes-debt-crisis.html

    Seems ready for this :partay:.

    ---------- Post added at 01:08 PM ---------- Previous post was at 01:06 PM ----------

    Here it is :D.
     
  8. Hu Songshan

    Hu Songshan INT'L MOD

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    China is willing to help Europe to solve its debt problem, a Chinese foreign ministry spokesman said on Tuesday after the Euro zone finance ministers sealed a 130-billion-euro ($172 billion) bailout for Greece.

    "We support the EU efforts in addressing the euro debt problem. We are always confident in the euro," Hong Lei, China's foreign ministry spokesman said at a regular press briefing.

    "We will continue to work with EU and IMF, in a way that is suitable to our own abilities, to make joint efforts to solve the euro debt crisis," Hong added.

    The statement did not represent any change in China's long-standing position on the EU. Hong did not say that China had made any specific financial commitment.

    Chinese Vice President Xi Jinping, while visiting Ireland, made it clear that China was willing to contribute more. Premier Wen Jiabao made a similar pledge at the EU-China summit earlier this month.

    But those public statements have so far stopped short of promising to provide funds to bail out governments or buy billions of euros of new bonds.

    Last week, the head of China's $410 billion sovereign wealth fund said Germany Chancellor Angela Merkel had asked it and other long-term investors to buy European government debt when she visited Beijing earlier this month, but such investments were "difficult" for long-term investors.

    Lou Jiwei, chairman of China Investment Corp, said any fresh injection of funds into Europe would be in industrial and other real assets, not government bonds.

    In Brussels on Tuesday, after 13 hours of talks, ministers finalized measures to cut Greece's debt to 120.5 percent of gross domestic product by 2020, a fraction above the target, to secure its second rescue in less than two years and meet a bond repayment next month.
     
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  9. FairAndUnbiased

    FairAndUnbiased SENIOR MEMBER

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    getting robbed again, it is opium wars 3.0
     
  10. Tractor

    Tractor SENIOR MEMBER

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    They don't need help,they have huge reserve,and we no need to give them money to show we are just advanced.
     
  11. fly2012

    fly2012 FULL MEMBER

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    There could be deals under the table. China is very interested in European's technologies that it cannot get from US. Unless Chinese leaders are super stupid, they'd ask for the relaxation of technology transfer. If largest customer base is the only incentives to help EU, then it doesn't make sense for China to wait until Merkel's visit before agreeing to help.
     
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  12. Hu Songshan

    Hu Songshan INT'L MOD

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    BRUSSELS / BEIJING - China and the European Union should quickly open talks on an investment treaty to provide a legal framework for investors from both markets, policy experts said.
    They said a treaty could facilitate mergers and acquisitions by Chinese multinationals in Europe, while helping investors from Europe, where the domestic market is sluggish, to gain a larger market share in China.
    The comments came after a bilateral summit last week reached a consensus to start negotiations on investment agreements this year. Neither side gave a timetable.
    Experts said that the announcement reflected a long period of preparation and was intended to boost confidence and predictability for investors amid prolonged economic weakness and debt crisis.
    "I think negotiations will open soon, since the announcement ... is the consequence of a long preparatory process by two sides since last year," Zhang Haiyan, academic director of the Euro-China Center of the Antwerp Management School, told China Daily.
    China has been signing bilateral investment treaties with EU member countries since the 1980s, and some of these pacts are set to expire. But in December 2009, the Lisbon Treaty brought foreign direct investment under the umbrella of Europe's common commercial policy. This change made it possible for the European Commission to take the initiative and negotiate a new agreement with China on behalf of the EU member states.
    Experts said that an EU-China investment treaty would play a "crucial role" in stimulating investment flows between Europe and China.
    Although EU-China trade is booming, investment flows are still small.
    "Such a treaty would provide a legal framework for bilateral investment, giving confidence to potential investors," said Shada Islam, a policy expert at the Brussels-based think tank Friends of Europe.
    "It will help clarify some issues, including intellectual property rights protection, government procurement and state subsidies," she said.
    Duncan Freeman, research fellow at Brussels Institute of Contemporary China Studies, said the treaty will be important for both sides.
    "While an investment treaty would give the EU greater access to a rapidly growing economy with positive prospects of strong growth, China would have access to a market that for the foreseeable future will have very poor growth and high investment risk."
    According to the Ministry of Commerce, investment inflows from China into the EU rose 94 percent last year to $4.28 billion. Foreign direct investment in China from the 27 European nations fell 3.7 percent to $6.35 billion.
    Chinese State-owned enterprises or multinationals in particular could benefit from an agreement, which would facilitate M&A activity, said experts.
    Chinese companies have sought to invest in Europe through M&As in recent years, but some have faced restrictions by European nations on their investment proposals, though the situation has improved in the past year as the region's debt crisis worsened, said experts.
    Some in Europe have expressed concern that China might "buy" the region amid its debt woes.
    Premier Wen Jiabao said recently that China had neither the intention nor the ability to "buy" Europe.
    Islam agreed. "China, like other investors, will only invest in businesses and sectors which are solid and which provide good financial returns," she said.
     
  13. Hu Songshan

    Hu Songshan INT'L MOD

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    Finance ministers and central bankers from the Group of 20 advanced and developing economies, during a two-day meeting here, said they are aiming for a deal to expand a European rescue fund and bolster resources at the International Monetary Fund by their next gathering in April.

    They hoped that could lead to a final, confidence-boosting agreement at a summit of world leaders in June.

    They acknowledged a long list of potential obstacles ahead. Greece must meet numerous conditions for its latest bailout within weeks. European leaders must overcome German reluctance to quickly raise the capacity of a euro-zone financial firewall—a rescue fund large enough to reassure markets that other troubled euro-zone economies will be able to manage their debts.

    At the same time, officials noted that surging oil prices threatened to depress a global recovery already weakened by European turmoil.

    G-20 officials encouraged European leaders to move quickly even as improved market conditions relaxed pressure on the euro zone.

    While Europeans have moved "slower than some people would like," U.S. Treasury Secretary Timothy Geithner said they have made progress "in convincing the world that they are not going to allow a catastrophic financial failure."

    "They've had a big impact in reducing the downside risks to growth globally and reducing the financial pressures that were so intense across the world" last year, Mr. Geithner said. But he warned the progress is partly "based on the expectation that there are more things to come" in building a credible firewall.

    The G-20 planned to issue a joint statement explicitly requiring expansion of that European rescue fund as a condition for increasing IMF resources to support Europe.

    European leaders this week plan to discuss combining money left in a temporary bailout fund with a permanent facility launching this summer, to create a combined €750 billion ($1 billion) that could support struggling economies such as Italy and Spain. But Germany's reluctance is likely to push that decision into late March or April at the earliest.

    At the same time, the IMF wants to expand its lending capacity by $500 billion to almost $1 trillion by raising money from its member nations. Together, the European and IMF funds could provide $2 trillion in rescue capacity to guard against further global turmoil.

    The European crisis has left the G-20, which serves as a board of directors for the world economy, pushing off other debates about longer-term problems. Officials here touched on other concerns such as currency volatility and imbalances between advanced and developing nations. But worries about growth in the short run make nations reluctant to make longer-term moves.

    "There's a vicious circle here where each is waiting for the other to do the right thing," Bank of Canada Gov. Mark Carney said at a conference for the Institute of International Finance, a banking group, alongside the G-20 meeting.

    Former Mexican central banker Guillermo Ortiz said Europe's short-term problems had "hijacked" longer-run concerns and called Europe's bailout of Greece "badly conceived, badly designed and badly implemented."

    Euro-zone officials are trying to implement Greece's latest rescue deal in the coming weeks. German lawmakers will debate the controversial plan on Monday, and Greece also must complete other steps, including a debt restructuring with private-sector bondholders.

    European Union economics chief Olli Rehn said Greece's deal still faces "implementation risks" due to "lack of political unity and weak administrative capacity." He said the European Commission, the EU's executive arm, would be installing its own officials at Greek ministries to provide technical assistance and monitoring on a permanent basis on the ground in Athens.

    Talks were continuing with the IMF to share the burden of the Greek bailout. The fund had contributed roughly one-third of Greece's first €110 billion bailout, but it has signaled that its participation will be lower in the second €130 billion rescue. Its contribution was said to be roughly 10%, or €13 billion, with the matter expected to be discussed March 13 by the Fund's executive board.

    IMF Managing Director Christine Lagarde said Tuesday the IMF wouldn't decide the amount of its financing for Greece until the second week of March, after euro-zone leaders discuss whether to strengthen their emergency rescue funds—an effort seen as the IMF trying to pressure Europe to build a bigger firewall.

    Nations outside the euro zone are holding back firm commitments to the IMF until Europe expands its firewall first.

    Officials said the amounts "being circulated" at the meeting are that China would contribute around $100 billion, and Japan would contribute around $50 billion. Chinese and Japanese officials and a spokesman for the IMF declined to comment.