China Says It Is Ready to Help on European Debt

Posted February 14th, 2012 at 1:50 pm (UTC-5)
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China says it is ready to get “more deeply” involved in helping resolve the European debt crisis.

Chinese Premier Wen Jiabao made the pledge Tuesday at a news conference in Beijing after meeting with European Union President Herman Van Rompuy. Wen said China's support is “sincere and firm” and that it will match its “words with actions.” But Wen gave no details of the extent to which China might help finance Europe's bailout fund to rescue debt-ridden countries like Greece.

“China supports the EU's sincere and firm intentions of resolving the debt crisis. We have confidence in the euro and the European economy. The Chinese side supports the EU's efforts to strengthen fiscal discipline. We hope the EU will continue to give a strong, clear and positive message to the rest of the world.”

The Greek parliament approved a new round of austerity measures earlier this week even as thousands of workers staged violent street protests in Athens in opposition.

The cabinet of caretaker Prime Minister Lucas Papademos met Tuesday to pinpoint another $430 million in budget cuts the country's international creditors called for last week. Greece also plans to cut its minimum wage by 22 percent, eliminate a fifth of its government jobs and reduce other spending. European leaders — weary of dealing with Greek debt issues — are also demanding written assurances that the new austerity plan will be carried out, even when a new government assumes office after national elections in April.

Greece was set to make its case Wednesday for approval of a new $172 billion bailout, its second in two years, at a Brussels meeting of the finance chiefs of the 17 nations that use the euro.

But the head of the finance ministers group, Luxembourg Prime Minister Jean-Claude Juncker, called off the gathering in favor of a teleconference. He said Greece had yet to provide the written assurances or information on it latest budget cuts.

The Greek economy remains weak and now is in its fifth year of a recession. The government reported that its economy shrunk 7 percent in the last three months of 2011 as the effects of earlier government austerity measures took hold.

Greece says that without the new bailout, it will be unable to meet $19 billion in financial obligations it owes next month. Greek officials are also nearing completion of negotiations with large private financial institutions to cut in half the amount the country owes them — a $132 billion reduction.

Financial services firms are wary of Europe's ability to resolve its governmental debt crisis. Moody's Investors Service late Monday downgraded the credit standing of six countries, including Italy and Spain, Europe's third and fourth largest economies, and Portugal, another country forced to secure an international bailout.