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China willing to help Europe recover from debt crisis

Chinese Premier Wen Jiabao offered a justification for helping Europe out of its debt crisis, in remarks that appeared aimed in part at countering public scepticism about the wisdom of using Chinese money to support rich world countries.

In remarks published yesterday, Mr Wen pointed out it’s in China’s best interest to aid its largest export market. “On the one hand, our largest export market is Europe. On the other hand, Europe is our biggest source for importing technology. From this perspective, helping to stabilise the European market is actually also helping ourselves,” Mr Wen said, speaking in Guangdong province, the southern Chinese export hub.

Senior government officials privately say they are battling to sell to the Chinese public, the idea of using China’s vast foreign exchange resources to help bail out European countries, which are widely perceived to have authored their own economic crisis with profligate spending. For many of the Chinese, the reserves represent fair reward from the toil of poor Chinese workers, and they resent the notion that they should be used to bail out rich Europeans. Management of China’s reserves, the world’s largest at 2.396 trillion Euros, is a politically charged issue in China, with a substantial portion of elite opinion already unhappy about how the reserves are used.

On Thursday, in a joint appearance with German Chancellor Angela Merkel, Mr Wen said China is considering deeper involvement in the euro zone’s bailout funds, but he also stressed Europe needs to address its own problems. China has long been a buyer of bonds issued by the European Financial Stability Facility, although the exact amount of purchases hasn’t been publicly disclosed. As a result the country’s exports have been hit by the European crisis, and Mr Wen said China must maintain a stable import and export policy in the face of severe global economic uncertainties.

Source: The Australian and Wall Street Journal