China Said to be Helping EU Finance Debt and Ease Euro Crisis     Print Email

Chinese officials have reportedly assured EU leaders that Beijing will be continuing (and perhaps step up) its rate of buying the government bonds of fiscally beleaguered member states of the euro.  Chinese support will be a powerful asset for these countries and the EU as a whole as they try to cope with markets’ attack on peripheral member states with large sovereign debt exposure. The previously undisclosed pledge was reported in the Financial Times.

Indirect confirmation came from Olli Rehn, European Commissioner for Economic and Monetary Affairs who said that “the European point of view we appreciate the support of China for the European and international effort to safeguard financial stability in Europe. “  Although China had not explicitly linked its bond purchases to any specific issues, Beijing reportedly asked in the talks for the EU to grant it “market economy” status and lift a long-standing arms embargo.

But Karel de Gucht, European trade commissioner, said that lifting the embargo required a unanimous vote from all EU member states, something analysts say is highly unlikely.

China’s opening toward Europe comes at a moment when Washington is pressing Beijing for adjustments in its currency exchange rate, more domestic stimulus and other actions to bolster global cooperation in responding to the economic crisis.

Any serious attempt to U.S.-EU discussions with a view to some coordinated transatlantic approaches to China have been “conspicuously and damagingly absent” in practice so far, despite occasional calls for such an effort by leaders on both sides of the Atlantic.

--  European Affairs