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China to the rescue for EU? - maybe


economy

China to the rescue for EU? - maybe

With German Chancellor Angela Merkel in China seeking support for the ailing euro, Premier Wen Jiabao has said Beijing is considering upping its participation in the rescue funds aimed at resolving the European debt crisis.

However Wen did not make any explicit financial commitments for the European Financial Stability Facility (EFSF) or the European Stability Mechanism (ESM) that is expected to replace it.

The ESM, a 500-billion-euro permanent bailout fund that is due to become operational in July. The EFSF is a temporary fund that has been used to bail out Ireland and Portugal and will help in the second Greek package.

After meeting with Wen Merkel said China’s leaders feel Europe solve its problems itself and she agrees: “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 more reliable members. 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.”

China has repeatedly said it supports a stable euro, and it is estimated it has about a quarter of its foreign exchange reserves in euro assets.

But Beijing has also said the members of the 17-country euro bloc should stump up more money before China commits additional resources to the International Monetary Fund to help Europe.

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