What price a Chinese rescue of Europe?

It’s rather embarrassing for Europe really. Their own leaders not having been able to find a way out of the funding crisis, other frustrated politicians are stepping forward instead.

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by Chris Marshall on Sep 15, 2011 at 11:16

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It’s rather embarrassing for Europe really. Their own leaders having been unable to find a way out of their funding crisis, other frustrated politicians are stepping forward instead.

Brazil’s outspoken finance minister Guido Mantega says the BRIC nations can help, while US treasury secretary Tim Geithner has come up with his own action plan.

But the outspoken Brazilian is not being taken too seriously, while Europe certainly can’t expect any real help from the indebted US: Geithner represents a country whose economic firepower is slowly being exhausted.

Instead, befittingly of the slow shift in power from west to east, Europe’s best hope lies with China where officials have offered to lend a ‘helping hand’.

Why would China want to rescue an emaciated eurozone?

As an investment, it stinks. For the kind of risk you get with European bonds – be they Italian or otherwise – you can get better returns elsewhere.

But China has an obvious vested interest in preventing a collapse in Europe, its biggest trading partner. China of course needs to protect its own economy and exporting companies, as it has never been shy of doing. So it's a financial investment.

But it’s also a political one, for two reasons. First off, China, eyeing the economic superpower status that is within its reach, is slowly expanding its ‘soft power’. It’s been doing this in its own backyard, among the Asean group of South east Asian nations, for a while. But a weak Europe – and US – offer China the opportunity to start being seen to shoulder some of the responsibilities that a superpower should be seen to be taking on – or develop a 'global conscience' as it has been described.

But as well as the ‘softer’ implications, Chinese Premier Wen Jiabao has taken the opportunity to make some tougher demands: first, indebted developed countries must ‘put their own houses in order’.

Second, he wants the EU to recognise China as a full market economy, something China has long pushed for, but which the EU, like the US, isn’t expected to budge on due to China’s state interference in the economy among other things.

There have also been suggestions in state-run Chinese media that EU ends its arms embargo on China in exchange for help. Consensus on a full-scale rescue for the eurozone will likely come well before agreement among EU member states on lifting the arms embargo.

These are tired old requests from China, ones that even an enfeebled Europe won’t give in to – yet.

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5 comments so far. Why not have your say?

Help from China this is not embarrassing it is bl**dy disgusting.

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The Chinese were clever little chaps 3,000 years ago, so their rise in world affairs today does not surprise.

With the leaders of the USA and EU determined to let so called market forces determined to make the rich richer, and the dumb populations of these country's become even more reliant on aspirations that will never be met, the Chinese are being handed a home run.

In the USA especially, if you ignore the news you are uninformed. If you take an interest in the news you are misinformed. Not sure what's worse.

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China deserves our admiration and support. With a population of 1.3 Billion (!) it is difficult to enter a global economy which has many shortcomings. We have been happy to rely upon china's low cost goods but then criticise its human rights. We need to encourage them to be our friends and help them emerge and develop. All major powers have problems. Many of our MPs have had their hands in the till, many of us are isolationists ... hating Europe; and we think we can act as the world's policeman, with our own idea of democracy. The US is finding it difficult to manage its economy and is sliding from the no 1 spot. Its time for a change to the world order and we can be there talking not criticising.

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The western economies have always had "state" intervention! Brussels has "intervened" for years. Anyone expecting China to behave any differently to the so called "full market economy" countries is completely misguided.

The ambitious Eurocrats should have thought very carefully before accepting anyone into their Euro grand plan! It was never realistic to see Greece and Germany on the same economic footing; just insane.

Let the Greeks revert to a New Dracma and watch them strike their way to oblivion!

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Rose G

Sep 16, 2011 at 11:37

Let's see how trustowrthy the Chinese are:

They build homes & which do not withstand the earth quakes in areas which frequently experiece these.

Their businessmen/women have little ethics - they are able to sell products which have been contaminated to their own population, do we expect them to care about what products they sell to their competitors?

Their clothes & other products are usually cheap fakes, if you like poor quality products?

They are untrustworthy & this makes them strange bedfellows, but hey, our politicians like that kind of behaviour, it makes their own dishonesty minor in comparison!

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