China frets about spreading EU debt woes
Tue Dec 21, 2010 2:37am EST
By Langi Chiang and Kevin Yao
BEIJING (Reuters) - China urged European authorities to back their tough talk with action on Tuesday by showing they can contain the euro zone's simmering debt problems and pull the bloc out of its crisis soon.
China, which has invested an undisclosed portion of its $2.65 trillion reserves in the euro, said it backed steps taken by European authorities so far to tackle the region's debt problems, but made clear it would like to see the measures having more effect.
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We are very concerned about whether the European debt crisis can be controlled," Chinese Commerce Minister Chen Deming said at a trade dialogue between China and the European Union.
"We want to see if the EU is able to control sovereign debt risks and whether consensus can be translated into real action to enable Europe to emerge from the financial crisis soon and in a good shape," he said.
Concerns that Europe's debt problems will spread beyond euro zone's periphery to engulf bigger economies such as Spain and Italy have weighed on global financial markets this year and taken a toll on the euro.
In part to protect its investments, China has repeatedly expressed its support for the single currency.
In October, Premier Wen Jiabao promised to buy Greek government bonds once Greece returned to debt markets, in a show of support for the country whose debt burden pushed the euro zone into a crisis and required an international bailout.
China's Vice Premier Wang Qishan said on Tuesday Beijing has done its part to help ease Europe's problems and held out hope that the crisis could soon be resolved.
"China supports the slew of measures by EU and IMF to stabilize financial markets, and China has taken concrete actions to help some European countries deal with their sovereign debt crisis," Wang said at the opening of the trade dialogue.
"The EU has taken active measures to deal with the debt crisis, and we hope the measures can achieve some results as soon as possible," he said.
But he noted risks abound, given weak global demand and volatile financial markets that are awash in excessive liquidity.
On its part, Wang said China would pursue a prudent monetary policy and active fiscal policy to ensure the world's second-largest economy can continue to grow at a solid and a sustainable pace.
MARKET ECONOMY
The annual trade talks between China and the European Union is a chance for the two major economies to seek compromise on a number of issues that have raised tensions in recent months.
China, for one, is concerned by what it sees as growing European protectionism and trade tariffs.
Minister Chen said Beijing hoped the European Union could recognize China as a market economy as soon as possible.
China is keen for that recognition as that would make it less vulnerable to anti-dumping charges under rules of the World Trade Organization.
Separately, Wang said China also hoped Europe would lift its restrictions on hi-tech exports to China.
Europe, in exchange, urged China to keep its markets open for European firms.
"China brought European consumers a large array of affordable products. This has benefited both of us. But now it is essential for both our economies that China has an open and welcoming business climate," said European Commission Vice-President Joaquin Almunia.
