CHINA AND THE EURO

CAN CHINA SAVE THE EURO?

Michael Schuman

Time (Blog), January 11, 2011

China's Vice Premier Li Keqiang has been on a shopping spree in Europe – not for fine French wine or the latest Italian fashions, but for greater influence. Just as Europe is desperate for a new source of ready cash, Li has offered up some of China's vast hoard of reserves to support the struggling euro zone through its debt crisis. In Madrid last week, Li pledged to buy more Spanish government bonds, saying that China “has confidence and great interest in the Spanish market.” With its bonds continuing to weaken, and its borrowing costs continuing to rise, Spain needs all of the customers it can find. (The two countries also signed $7.3 billion in business deals.) Then Li went on to Berlin, where he pledged in a speech that China would continue to support Europe and its monetary union. Li's comments follow similar statements made by Premier Wen Jiabao during the latter's visit to Greece in October. Wen, too, promised to aid Europe through the crisis by buying Greek debt.

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