The Chinese premier, Wen Jiabao, has thrown the eurozone a vital lifeline and pledged to buy billions of euros of European debt to keep the single currency project alive.
The move, which will be a relief to struggling eurozone countries including Greece, Portugal and Ireland, was announced as Mr Wen continues his four-day trip to Europe, arriving in Britain last night from Hungary and going on to Germany on Monday night.
China’s plan to continue to invest in the continent’s volatile sovereign debt market comes as efforts continue to prevent Greece’s financial crisis making it the first nation to be forced out of the euro.
“China is a long-term investor in Europe’s sovereign debt market,” Mr Wen said at a press conference with the Hungarian prime minister, Viktor Orban.
“In recent years we have increased by quite a big margin our holdings of government bonds. We will consistently continue to support Europe and the euro.”
He added: “China is ready to work with Europe to share opportunities, cope with challenges and achieve common development and to make unremitting efforts for stable development of the world economy and an in-depth development of China-Europe ties.”
Temporary relief. The Euro is toast. But, this will likley send the Euro higher for a couple days.
Non-event. Already priced in.
We’ve heard this before and no doubt they are buying Euro sovereign debt but if they want to put a line under the crisis they need to wade in and by a massive amount and do it very publicly.
Most people don’t understand the power of Germany. They manufacture the equipment Asia uses to produce its inventory.
US corporations (still?) manage and control much of these relationships (on one level or another).
Understand that the Euro was designed and created by, essentially, America.
From time to time (May 2010 Flash Crash), continents have economic tussels, but there is much that goes unsaid.
Appeasing the Asian elite with bond offerings is small payment for the internal steel fist they impose on their people who deserve better.
People scoff and ridicule new offerings like Facebook, Linkd, etc., but, in reality, most people in “emerging markets” wish they could access these electronic “life-styles” (?), etc..
Hence the IP (“Intellectual Property”) bubble, which many are defaming as a “bubble,” is, in fact, the most novel form of brand loyalty creation in history and, on a rarefied level, deserves much more respect.
You are right most people dont realise power of Germany.
Comments like this from China have caused sharep rallies in the Euro before but this time the stress in interbank markets is so bad they need to say they are going to buailout EU banks to save it this time.
Why thank you for this recognition.
Understanding the essence of politics isn’t my weakness, it us, however, translating the economic consequences where I have much room for improvement.
Your point emphasizes this area of growth. Good insight.