Chinese Premier Wen Jiabao raised the prospect of contributing to the euro-area’s bailout programs, telling Chancellor Angela Merkel that China may be prepared to assist in resolving its debt crisis.
The Chinese government is considering funding options for the temporary European Financial Stability Facility and its permanent successor, the European Stability Mechanism, through the International Monetary Fund to help stabilize the monetary union, Wen said yesterday after meeting Merkel in Beijing. China has previously said that it needs more detail on any plan to contribute funds to the euro area.
China is “investigating and evaluating ways, through the IMF, to be more deeply involved using the ESM and EFSF channels in solving the European debt issue,” Wen said at a briefing alongside Merkel, who arrived in China early yesterday on her fifth visit to the world’s most populous country as chancellor.
European leaders have sought to tap China, the holder of the world’s largest foreign-exchange reserves, as they struggle to end to the two-year-old crisis. Merkel came from the latest European Union summit, where leaders this week locked in a treaty containing more stringent debt rules even as Greece inches toward an agreement with creditors to ease its debt load.
After traveling with Merkel to Guangzhou today, Wen said again that China wanted to work with Europe to fight the financial crisis.
“Some people say this means China wants to buy Europe,” Wen said at a briefing with Merkel. “China doesn’t have this intention and doesn’t have this ability.”
As a way to increase the euro-area’s firewall, leaders in October designed leveraging programs that could draw outside investment. Chinese Vice Finance Minister Zhu Guangyao said afterward that his government needed to hear more about particulars, such as the extent of loan guarantees and the way the senior-debt portion would be structured.
Central Bank Governor Zhou Xiaochuan declined to comment when asked about how Chinese participation in the bailout funds might work.
Luxembourg’s Jean-Claude Juncker, who leads the group of euro-area finance ministers, said steps to tighten fiscal discipline and tackle the sovereign debt crisis adopted at the Jan. 30 summit were “largely insufficient.”
EU leaders will need to take further steps when they convene again in early March, Juncker said in a speech in Luxembourg yesterday, adding that he seeks better coordination of economic policy across the bloc.
“We have an internal market, we have a common currency, but we don’t have a centralized economic authority,” Juncker said.
— With assistance by Michael Forsythe, and Patrick Donahue