China: A rich fool?

 
High-tech cash machines being exhibited at a trade fair in Beijing on 13 February 2007 Chinese media worry that China may not get its money back if it bails Europe out

This is, everyone agrees, a dangerous time for the global economy. China's President Hu Jintao was saying so at the G20 in Cannes: "At this critical moment, the G20 must work to address the key problems, promote global economic growth and financial stability," he said.

So what does he mean as far as China is concerned? The utterances of China's leaders can be, to borrow from the Greeks, positively Delphic. Is China prepared to put its money on the table?

Here in Beijing it's worth listening to the swirl of commentary in China's newspapers. They have a lot to say about Europe's crisis. Remember China's media is state-controlled, so it gives a pretty good idea of the way the currents of thinking are running.

The first thing that is striking is how cautious China is of getting too deeply entangled in Europe's problems. "Honestly we should not get too involved in [Europe's debt crisis]. The chances of us getting our money back are relatively low, it's a dangerous game," is a typical comment in the English-language China Daily.

That's pretty understandable, any investor wants to know their money is going to be repaid, and leaders here know they will face a public backlash if people believe, in the words of the Beijing News that they "squander China's foreign exchange reserves" and "waste national wealth".

But what is more surprising is to see how suspicious many are about getting involved in any European bailout fund, some describing it as "a trap" that could mean "China is 'kidnapped" by European debt.

'Don't be dazzled'

Ordinary Chinese I've spoken to have said they think helping out Europe could be in China's interest. But China's papers are voicing suspicion that an indebted West is trying to lure China into wasting its hard-earned cash, the implication is that this could be a ploy, to weaken China and contain its rise.

Klaus Regling, chief executive of the European Financial Stability Facility (EFSF), in Beijing on 28 October 2011 Klaus Regling says Europe's bail-out fund is a safe bet for China

So there are warnings that a profligate, rich Europe could be trying to get China, that's still relatively poor by comparison, to hand over its wealth cheaply. The information centre of China's own cabinet, the State Council, warns that "China 'saving Europe' is actually 'the poor saving the rich' .. China should not be dazzled by this so that it acts impetuously and blindly".

When Klaus Regling, the head of Europe's bailout fund, was in Beijing a week ago he was baffled when a Chinese reporter put it to him bluntly that the fund was a "trap" for China. His reply: "No, China needs to invest its surpluses and we can offer a good rate of interest."

But what's clear is that China wants more than that. Much of the comment focuses on how Beijing should demand concessions for any investment, like market economy status that would make it harder to bring WTO cases against China, the lifting of restrictions on high-tech exports to China, and an end to the EU arms embargo in place since the Tiananmen massacre.

There is a clear feeling that "supporting Europe" does make sense, but as Shanghai's Liberation Daily says: "China is not a rich fool, it is not obliged to write a 'rescue story', of the poor saving the rich."

 
Damian Grammaticas Article written by Damian Grammaticas Damian Grammaticas China correspondent

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  • rate this
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    Comment number 102.

    The root of this problem is the banks and the refusal of EU/US Govts to let them fail.
    Let Greece default and those who purchased its bonds can sue the Credit Agencies (that gave Greece AAA ratings) for fraud.
    In fact it would be better if that did happen, as the whole Greek saga is based on fraud/deception the subsequent default would be due to a crime and cannot trigger the CDS bomb.

  • rate this
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    Comment number 101.

    Let's not pretend the West are the 'bad guys' here. China grew rich through enslaving it's own people and keeping them in poverty - yet whenever China approaches the IMF with its begging bowl claiming to be unable to feed its people, we still happily fill it to the tune of $2.5b per annum, despite PRC space missions etc. I feel all these comments about western imperialism and arrogance are a bit one-sided; let's not forget the Tibetans and Uyghurs, nor the Africans, who must live under Chinese-backed dictators and suffer the effects of 'neo-colonialism' (Zimbabwe is a case in point).

  • rate this
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    Comment number 100.

    Let's not forget that the ancient Greek origin of the word "Europe" translates into modern English as "a big beam"...

  • rate this
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    Comment number 99.

    Mr. Grammaticas asks; "China: A rich fool?" The very question shows an exceptionally distorted view of Europe's importance to the world, one so typical of Europeans. They still think the world revolves around them and will come to an end if their corrupt bankrupt self enfatuated societies collapse. There's nothing that can save them even if the US and China wanted to and the world won't end.They've lived on borrowed time and money since I can remember.That's over now.I ask "Europe a poor fool?" I think so.

  • rate this
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    Comment number 98.

    People in the west such as myself used to generate the wealth and exports that we used to use to pay the interest on the debt. Unfortunately I was made redundant and my job moved to China. While this situation has taken the economists by surprise, I think you will find it comes as no surprise to the many people who are in the same position.

 

Comments 5 of 102

 

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