China Says It Could Help Rescue Europe

Posted February 2nd, 2012 at 11:15 am (UTC-5)
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China says it is considering increasing its investment in Europe's rescue funds for debt-ridden countries, and possibly providing aid through the International Monetary Fund.

After meeting Thursday with German Chancellor Angela Merkel in Beijing, Premier Wen Jiabao said China could invest in Europe's temporary bailout fund or the new $656 billion permanent fund set to start in July.

Wen said it is “very urgent and important” to resolve Europe's two-year governmental debt crisis. He said China supports Europe's efforts and that it is confident in the continent's economy.

China has $3.2 trillion in foreign exchange reserves, but Wen made no explicit commitments to provide more aid.

Ms. Merkel said the 17 countries in the European bloc that use the euro currency have to be disciplined in their spending and cannot continue to roll over their current debts without reducing them. She said the eurozone nations must collectively work to protect the euro.

“As a common currency, Euro has made the European Union more powerful than before. Germany as a major exporting nation has largely benefited from this currency and we will carry out more constructive work within the framework of the eurozone and the European Union. Since we have a common currency, all the member nations should do their homework properly, and move forward with their responsibilities to ensure they are a more reliable member. On the other hand, all the members must help each other because a common currency means we need to make joint efforts to safeguard it. Meanwhile we need to be more cooperative and creative in making our economic policies and I believe in the future the European nations will stand closer to each other.”

The German leader, who oversees Europe's strongest economy, is on a three-day trip to China aimed partly at assuring it that Europe is acting to resolve the debt crisis. European Union leaders earlier this week adopted a plan calling for tighter controls over the spending of individual countries, although Britain and the Czech Republic did not join the other 25 EU nations in approving the pact.

Greece's perilous financial condition remains at the forefront of Europe's concerns, as the Athens government has yet to complete negotiations with its private creditors to cut in half the amount it owes them. Greece is also seeking a new $169 billion bailout, its second in two years.