A REINDUSTRIALIZATION OF THE EU?

EU INDUSTRIAL REVOLUTION TARGETS CHINA

Ann Cahill

Irish Examiner, October 11, 2012

Europe’s third industrial revolution has been launched, aimed at winning back manufacturing from China and creating more jobs in crisis-hit economies, though Ireland already exceeds the EU’s target.

There will be pressure on productivity and wages if jobs are to be taken back from low-cost developing countries, though the cost of labour in China, the EU’s biggest competitor, is rising, said Industry Commissioner Antonio Tajani.

The Central Bank recently said wages need to drop by 10% to compete.

A bigger share of products made in Europe use components imported from China than any of the other leading industrial blocs, according to the latest figures.

For most countries, services have taken over as the biggest driver of growth and employment, as just a few years ago the policymakers declared the mark of a sophisticated economy.

As a result, just over 15% of Europe’s GDP comes from manufacturing and the target for 2020 is 20%. Ireland ranks second highest, behind Slovakia with 26% of its GDP coming from this sector, but higher than Germany’s 20%, while France and Britain are at 10%.

However, this does not register value of imports, such as raw chemicals used in Ireland’s massive export pharmaceutical sector, or components for technology products such as chips.

Mr Tajani announced a number of actions to, for example, stimulate investment in new technologies, improve the business environment, allow access to markets and finance, particularly for SMEs, and 0ensure skills meet industry needs.

"We cannot continue to let our industry leave Europe," he said.

(...) [article here]

CHINA AND THE EU

WEN JIABAO CHIDES EU OVER TREATMENT OF CHINA

The EU-China annual summit got off on a sour note Thursday when Beijing raised long standing complaints over its treatment by the bloc even as both sides lauded the relationship.

AFP

The Telegraph, September 20, 2012

Premier Wen Jiabao, in opening remarks, gave a lengthy list of achievements over the past 10 years, stressing: "We do not have major conflicts of interest."

But there was a sting in the tail when he used forceful diplomatic language to raise the issue of an EU arms embargo, imposed since the 1989 Tiananmen Square pro-democracy protests, and the EU's refusal to treat China as a fully-fledged market economy and so lift all tariffs on Chinese goods.

"I have to be very frank in saying this ... but the solution has been elusive over the past 10 years. I deeply regret this and I hope the EU side will take greater initiative to solve these issues," he said.

EU sources had said ahead of the summit, that "we have agreed to disagree" with the Chinese on the arms embargo.

The issue continues to divide EU member states and Britain notably has refused to bend to pressure from France and Spain to review the embargo.

(...) [artículo aquí]

EUROPA, ¿AL IGUAL QUE JAPÓN?

EUROPA, ANTE EL RIESGO DE 'JAPONIZACIÓN'

Los problemas bancarios no resueltos y el pacto de austeridad fiscal amenazan a la región

Alicia González

El País, 8 de abril de 2012

Los pájaros negros sobrevolaban el pasado fin de semana el elegante hotel Villa d'Este, a orillas del lago Como, en la Lombardía italiana. Los mensajes de los participantes en el Foro Ambrosetti resultaban tremendamente sombríos sobre el futuro de la eurozona. En especial, el del economista jefe de Nomura, Richard Koo, que alertaba del riesgo de que Europa acabe como Japón y de la necesidad de dar marcha atrás con la actual oleada de ajustes. A su lado, negando que ese sea el resultado de las políticas de austeridad, el consejero delegado del Fondo Europeo de Estabilidad Financiera, Christophe Frankel, y el que fuera uno de los halcones más duros del Banco Central Europeo (BCE), Jürgen Stark. Pero los murmullos de los corrillos indicaban que el augurio de Koo no caía en saco roto.

Su argumento es que el diagnóstico de la crisis económica por parte de las autoridades europeas es erróneo. “Asistimos a una crisis de balances que está forzando un desendeudamiento masivo del sector privado. La clave es que si el sector privado está en un proceso de desapalancamiento, lo último que necesitas es que el Gobierno reduzca su déficit presupuestario”, alertaba Koo. Así sucedió con Japón en 1997, desde luego. En su opinión, “si el Banco Central tiene los tipos de interés próximos a cero y nada pasa, es que has dejado de estar en un mundo normal”. En esas conferencias, el más agorero de los economistas, Nouriel Roubini, asentía. “Europa puede ser peor que Japón”, aseguraba. “Japón tuvo una gran recesión y un gran estancamiento, pero nunca tuvo una Gran Depresión. Y la recesión en algunos países de la eurozona puede convertirse en una depresión, lo mismo que sucedió en los años treinta”.

(...) [artículo aquí]

SHIFT TO THE EAST

PREPARING FOR THE SHIFT TO THE EAST

Western investors must pay attention to Asia’s increasing share of a range of global activities

Philip Coggan

FT Adviser, March 12, 2012

When you are investing for the long term, you need to think about long-term trends.

And the likeliest long-term trend is the continued rise of Asia.

In 1970, developing Asia (everything but Japan) produced just 9 per cent of world GDP. By 1990, its share had risen to 14 per cent. Now it is 28 per cent. By 2030, its share is expected to be 40 per cent and by 2050, almost 50 per cent, according to forecasts from the Economist Intelligence Unit.

Currently North America (the US and Canada) has 21.5 per cent of world GDP and western Europe 18.7 per cent. By 2050, their respective shares will be 12.3 per cent and 8.9 per cent. In other words, their contribution will be less than half that of Asia.

Just think about that in terms of world markets. American oil consumption is 19m barrels a day. China consumes just 9m barrels, even with four times as many people. If China’s consumption per capita rose to just half US levels, its total consumption would be 38m barrels a day. The extra 29m barrels a day China would consume is the equivalent of a third of current oil production. And that is before we think about the extra oil that will be needed by the rest of the world. There will be 9bn people on the planet, compared with just 7bn today.

(...) [artículo aquí]

CHINA, THE EU AND FOREIGN POLICY

EU-CHINA SUMMIT HIGHLIGHTS FOREIGN-POLICY ISSUES

Peter Taberner

New Europe, February 21, 2012

Last week’s EU-China Summit provided a glance into China’s attitude to its foreign policy, with the views from the east taking a more assertive stance on issues surrounding Iran and Syria.

China incensed the western by vetoing a UN Security Council resolution to stop violence in Syria, and their main newspaper the People’s Daily, anorgan of the Communist Party, reiterated Beijing’s fear that other major powers are trying to stir up conflict with this comment in its 20 February edition.

"If Western countries continue to fully support Syria's opposition, then in the end a large-scale civil war will erupt and there will be no way to thus avoid the possibility of foreign armed intervention."

The Iran situation has also unravelled into a stalemate between east and west with Beijing not joining the EU in an embargo on buying Iranian oil set for 1 July, instead calling for talks over the Iranians’ desire to enrich its uranium for what Tehran claims to be for energy purposes only.

(...) [artículo aquí]

CHINA AND THE EU’S SOVEREIGN DEBT

CHINA TO KEEP INVESTING IN EURO ZONE DEBT: CHINA C.BANK GOV

Aileen Wang and Nick Edwards

Reuters, February 15, 2012

BEIJING (Reuters) - China will continue to invest in euro zone government debt and it remains confident in the euro, the country's central bank governor said on Wednesday, while calling on Europeans to produce more attractive investment products for China.

Zhou Xiaochuan admitted that China and other emerging nations like Brazil, Russia or India were waiting for the right time to help the bloc, after a European Union state visit was once again met with encouraging words but no concrete public commitments on fresh funding from China.

But he also suggested Europe needed to work harder to entice Beijing to part with its capital.

"We also hope that the euro zone and EU can innovate their mechanisms to offer new products that are more helpful for Sino-Europe cooperation," he said.

The central bank governor reiterated previous comments from Premier Wen Jiabao that China was ready to play a bigger role in solving Europe's debt problems, noting China had not cut its reserves exposure to the euro zone.

"At the G20, our state leaders promised European leaders that, amid the global financial crisis and the Europe sovereign debt crisis, China will not cut the proportion of euro exposure" in its reserves, Zhou said in a speech at the University of International Business and Economics in Beijing.

"Some people had cast doubt or suspicion over the currency, but for the People's Bank of China, we have always been confident in the euro and its future," he added.

Although Zhou's comments largely underlined China's established stance, the remarks helped push the euro higher and were cited in markets for supporting stocks buying in Asia.

(...) [artículo aquí]

IS THE DECLINE OF THE WEST IRREVERSIBLE?

THE DECLINE OF THE WEST REVISITED

Shlomo Ben-Ami

The Straits Times, February 3, 2012

MADRID - Since the publication in 1918 of the first volume of Oswald Spengler's The Decline of the West, prophecies about the inexorable doom of what he called the 'Faustian Civilisation' have been a recurrent topic for thinkers and public intellectuals. The current crises in the United States and Europe - the result primarily of US capitalism's inherent ethical failures, and to Europe's dysfunction - might be seen as lending credibility to Spengler's view of democracy's inadequacy, and to his dismissal of Western civilization as essentially being driven by a corrupting lust for money.

But determinism in history has always been defeated by the unpredictable forces of human will, and, in this case, by the West's extraordinary capacity for renewal, even after cataclysmic defeats. True, the West is no longer alone in dictating the global agenda, and its values are bound to be increasingly challenged by emerging powers, but its decline is not a linear, irreversible process.

There can be no doubt that the West's military mastery and economic edge have been severely diminished recently. In 2000, America's GDP was eight times larger than China's; today it is only twice as large. Worse, appalling income inequalities, a squeezed middle class, and evidence of widespread ethical lapses and impunity are fueling a dangerous disenchantment with democracy and a growing loss of trust in a system that has betrayed the American dream of constant progress and improvement.

[artículo aquí]

CHINA AND EUROPE’S BAILOUT

CHINA SHOULD NOT SAVE EUROPE

By Andy Xie

China.org, December 3, 2011

There are five reasons why participation in any bailout plan for the Eurozone area is not in China's best interest.

First, the fiscal payback is not good. So far, no fruit has been borne by China's financial adventures in overseas markets. Investments in the Blackstone Group, Morgan Stanley and Rio Tinto Group have all failed. Since state-owned financial institutions mix business and politics, decision-making is often arduous. These failures have proven, thus far, that China's state financial system is not capable of selecting and operating overseas investments.

Secondly, Europe will not repay China's assistance politically. Although multinational corporations like BMW, Mercedes-Benz and Carrefour make huge profits in China, the European media and politicians blame China for their unemployment woes. The European Union's refusal to recognize China's market economy is solid proof of prevalent attitudes towards China in the region. The EU's discontent with China is growing with the worsening of Eurozone debt crisis. Assistance in a bailout may result in further worries about China's true intentions, harboring even stronger opposition from critics.

Thirdly, China's assistance would greatly weaken German influence in Europe, and imbed China in the quagmire of European politics. China needs at least ten more years before it will be poised take on issues related to handling of European affairs.

(...) [artículo aquí]

JAPAN’S CONTAGION RISK

EUROPE DEBT CRISIS POSES GRAVE RISK TO JAPAN, SAYS FURUKAWA

Mitsuro Obe

The Australian, November 25, 2011

The Japanese government today said it is prepared for any contingencies that may result from the widening sovereign debt crisis in Europe, and is in lockstep with the Bank of Japan in dealing with potential contagion risks.

"The recent spread of credit woes to Italy poses a grave risk to the Japanese economy," said economic and fiscal policy minister Motohisa Furukawa in a press conference. "The government and the Bank of Japan share strong concerns and have agreed to work closely with each other."

The statement came after the Cabinet Office yesterday disclosed that Japan's financial institutions have the most exposure to Italian sovereign debt among foreign banks after those of France and Germany.

The government and the BoJ are studying how the crisis could play out and how they should respond, according to a Cabinet Office official. "They are also exchanging information to stay ahead of the curve," the official said in an attempt to reassure financial markets about Japan's ability to handle such a crisis. The official noted that after the financial crisis that began in the US in 2008, Japan swiftly enacted economic stimulus measures with the support of massive liquidity injections from the BoJ.

The statement was adopted in a meeting of senior government and BoJ officials today to review the progress of measures to cope with the strong yen that were introduced last month.

In the meeting, Deputy BoJ Governor Hirohide Yamaguchi noted that "the crisis of confidence has reached major economies of Europe and has caused a failure in a bond auction in Germany", according to officials present at the meeting

(...) [artículo aquí]

CHINA’S FALTERING EXPORTS

CHINA'S LOPSIDED BALANCING ACT

John Lee

Business Spectator, November 24, 2011

Over the weekend the Chinese vice-premier, Wang Qishan, who is responsible for overseeing the country’s financial sector predicted that the global economy could slump into a long-term recession, and urged China to speed up reforms to cope with any possible fallout. Wang would have known ahead of time what the HSBC Purchasing Managers Index (PMI) revealed on Wednesday – namely the lowest recording of industrial activity over the month of November for almost three years. In response, the Australian all ordinaries index fell 1.86 per cent, while share prices for mining giants BHP Billiton and Rio Tinto fell 3.05 per cent and 3.41 per cent respectively.

Given that 23 cents in every dollar worth of our exports goes to China, the local sharemarket response is predictable. But Australian investors, who generally invest for the short- or medium-term, are getting it wrong and displaying a worrying lack of understanding as to how the Chinese political economy actually works. In fact, the data coming out of China over the past week ought to delight all but the longer-term investors in our big miners.

The November PMI figure of 48 indicates that industrial activity has actually shrunk since a figure of 50 represents stagnation. The index is derived from responses from surveys sent to around 400 executives of manufacturing companies. It is important to realise that the companies surveyed consist overwhelmingly of foreign-invested or foreign-owned export manufacturers in China. If we examine the PMI figures since 2004, the index’s correlation with the demand for Chinese exports in the major global consumer markets of the European Union and the United States is almost perfect. Therefore, the disappointing PMI figure for November tells us what we already know – that demand for Chinese exports in the industrialised world is faltering, especially in the EU.

(...) [artículo aquí]

ASIA’S RESILIENCE

ASIA CAN WEATHER THE GLOBAL STORM

Emerging countries in Asia should prove resilient again if the global economy worsens, according to a report published by Fitch Ratings this week.

Rupert Walker

FinanceAsia, November 23, 2011

Economies in Asia are well placed to withstand a further worsening of the global economy, according to a report released by Fitch Ratings this week. In general, healthy trade and fiscal balances, policy flexibility and their resilience in 2009 suggests that most countries in the region are well-protected against contagion from further shocks from Western Europe and the US.

The report — “Emerging Asian sovereign pressure points” — noted that Thailand combines high exposure to a global slowdown with limited scope for monetary policy stimulus, but in contrast, Indonesia has a track record of resilience to global economic shocks and has the most scope for a policy response. Meanwhile, China and India are less exposed to a global growth shock, but also have little tolerance for policy stimulus should things go badly wrong.

A sudden worsening in global market liquidity is likely to hurt Indonesia, Korea and Malaysia most, but would have a limited impact on China, Taiwan and the Philippines. But, “emerging Asian exposure to a sudden stop in external financing ... appears limited, with only Sri Lanka and India running deficits on their basic balances (current account balance plus net foreign direct investment inflows)”.

The report looked at several metrics to assess the potential exposure of emerging Asian economies and their sovereign credit-worthiness to a further deterioration in the global economy and heightened stress in the financial system. However, the rating agency stressed that these contingencies do not reflect its base case scenario.

Fitch pointed out that the threat to the real economy from a potential sharp worsening in the global economy can be determined through trade openness and the scale of the deviation seen in 2009 GDP growth compared with the preceding five-year average growth rate. The three countries that experienced the largest shock to growth — Malaysia, Mongolia and Thailand — are among the most open to trade in the region, while those least open to trade suffered smaller shocks to GDP growth in 2008 to 2009.

(...) [artículo aquí]

ASIA FACING THE EUROPEAN DEBT CRISIS

WORLD BANK SEES CHINA SOFT LANDING, ASIA STIMULUS ROOM: ECONOMY

Shamin Adam

BusinessWeek, November 22, 2011

The World Bank said China is heading for a soft landing of growth in excess of 8 percent next year, and with most Asian nations has fiscal scope to cushion its economy from an escalation in Europe’s debt crisis.

Developing East Asia, which excludes Japan, Hong Kong, Taiwan, South Korea, Singapore and India, will see its expansion moderate to 7.8 percent in 2012 from 8.2 percent this year, the Washington-based development lender said in a semiannual report today. While China faces the risk of a “strong” impact from a real-estate correction, its gross domestic product will rise 8.4 percent next year and about that pace thereafter, the bank said.

The report signals that Asia, which led the world out of the 2008-2009 recession, is poised to withstand the blows from any slump in demand for its exports or pull-back in credit by European banks. The World Bank said countries with high investment rates, such as China, should focus on boosting consumer spending in any fiscal stimulus, such as with social security and pension provision.

“Clearly the region is being affected by Europe and the global environment has weakened,” Bert Hofman, the World Bank’s chief economist for the East Asia and Pacific region, said in an interview with Bloomberg Television. At the same time, “imports into China are holding up quite nicely and it is becoming increasingly a market for consumption goods of manufacturing countries in the region.”

(...) [artículo aquí]

CHINA OR GERMANY?

GERMANY MUST DO IT, NOT CHINA

Michael Pettis

Global Economic Intersection, November 13, 2011

I have already discussed last month why I think the desperate attempts by Europe to get China and other Asian and BRIC countries to bail out the weak sovereign borrowers is absurd, but the topic has become so important in the past two weeks, at least judging by the number of calls I have received from journalists, that I thought I would reproduce a discussion I recently had in a forum among a number of China specialists (the forum is Rick Baum’s estimable ChinaPol).

We were discussing an article that recently appeared in the New York Times calling for a Chinese bailout of Europe.  According to the author, Arvind Subramanian, at the Peterson Institute, “Europe is drowning and needs a lifeline.”  That lifeline is effectively a bail-out package from China.

Bad politics

Although I agree with Subramanian that China should use current events to play a bigger and more decisive role in global finance, and I certainly agree that as a surplus nation it is very much in China’s interest provide financing to the eurozone, I am not sure it makes sense for China to do anything that actually helps Europe.

In fact I found the article a little bizarre, but not at all out of step with the thinking in Europe. I think the request for assistance from China and other developing countries shows how confused Europe’s leaders are and reinforces the claim made by Beth Simmons in her book (Who Adjusts) on the politics of the 1930s European debt crisis. Simmons argues that one of the problems with a debt crisis is that when debt levels are perceived as being too high, major stakeholders are forced into behaving in ways that reinforce credit deterioration and exacerbate the debt problem.

(...) [artículo aquí]

ASIA AND THE EUROZONE CRISIS

US URGES ASIA TO HELP SAVE GLOBAL ECONOMY

Andrew Gully

AFP, November 11, 2011

HONOLULU, Hawaii — The United States urged Asia to do more to stimulate growth to offset the eurozone crisis, ahead of a summit in which Washington is seeking to shape the rules for the emerging Pacific region.

Police sealed off Honolulu's usually laid-back Waikiki Beach as Chinese President Hu Jintao became the latest leader to arrive for the weekend summit that will be led by US President Barack Obama, a Hawaii native.

US Treasury Secretary Tim Geithner, chairing talks on Thursday of finance ministers from the APEC bloc, said that the meeting was dominated by how to make growth more balanced and sustainable, given the crisis in Europe.

"Asian economies will need to do more to stimulate domestic demand growth -- both so they are less vulnerable to slowdowns, such as the situation in Europe, and so they can continue to contribute to global growth," he said.

The 21 members of APEC, or the Asia-Pacific Economic Cooperation forum, account for about 40 percent of the world's population, more than 50 percent of its gross domestic product and 44 percent of global trade.

"While APEC economies are the most vulnerable to a global slowdown, they can also play the greatest role in contributing to the global recovery and establishing the foundations of strong, sustainable, and balanced future growth," Geithner said.

(...) [artículo aquí]

CHINA’S REBALANCING ACT

CHINA WELL PLACED SHOULD EUROPE DERAIL

Clyde Russell

The Economic Times, November 10, 2011

It's becoming very hard to sustain a bearish view of China's economy with data showing solid demand in commodity imports offsetting some weakness in manufactured exports.

The main takeaway from Thursday's trade numbers is that the Chinese economy appears to be successfully balancing away from export-led growth to a more sustainable path based on domestic investment and consumption.

But let's be honest, the unfolding train wreck that is Europe is currently drowning out any positive news from Asia, and the new concern for the world's main economic bright spot is that it will be unable to escape the fallout from a potential messy break up of the euro currency bloc.

It would be silly to pretend that a prolonged crisis in Europe won't impact China, so the question becomes how well-placed is the world's largest commodity user to handle the increasing likelihood of a renewed recession in its largest trading partner.

Firstly, Chinese exports to Europe won't drop off a cliff in all but the doomsday scenario.

What is likely is that the growth in exports will decline, as indicated by the October trade figures, where shipments to Europe increased by 7.5 percent year-on-year, the lowest since February and well below the overall rate of 15.9 percent for all exports.

That overall rate was also possibly a disappointment, coming in shy of the forecast gain of 16.5 percent and the 17.1 percent jump recorded in September.

But imports surged in October, jumping 28.7 percent on the year, comfortably beating the forecast for a 23 percent jump and September's 20.9 percent increase.

(...) [artículo aquí]

INDONESIA AND THE EU CRISIS

DEBT CRISIS AND THE FUTURE OF EUROPE: IS INDONESIA SAFE?

Winarno Zain

The Jakarta Post, November 5, 2011

The Greek drama surrounding its debt crisis is still unfolding, and it is clear by the day that the crisis is more severe than expected.

The resolution of the crisis will take several years and will be very costly and the magnitude of that cost will be beyond the financial ability of the eurozone governments.

Efforts to make decisions to resolve the crisis are facing the risk of being obstructed by policy paralysis resulting from political uncertainties that grip several euro countries.

All these were evident after eurozone leaders finished their summit on Oct. 27 in Brussels. They claimed to have crafted a “comprehensive policy” to contain the European debt crisis. But markets think the policy lacks meaningful details and leaves many questions. It reflects the daunting task of the eurozone leaders.

The problem is getting more serious as the amount of Greek debt that needs to be written off turns out to be larger than previously forecasted. In July, it was estimated that a 21 percent write down of Greek sovereign bonds would be sufficient to give some relief for the Greek government. But the Greek economy deteriorated rapidly, as austerity measures have caused a deeper recession than expected.

(…) [artículo aquí]

INDIA AND THE G20

INDIA READY TO SUPPORT FALTERING EUROPE UNDER IMF UMBRELLA

The Economic Times, November 3, 2011

CANNES: The big emerging economies, Brazil, Russia, India and China (BRIC), are likely to meet ahead of the G20 summit beginning Thursday to chalk out a joint strategy as the leaders of the world's biggest economies confront two surprise developments.

Embattled Greek Prime Minister George Papandreou called a referendum to approve the October 27 bailout package hammered out by European leaders even before the realisation of its inadequacy had sunk in.

The other development emanated outside Europe, when Japan intervened earlier this week to stem the rise of yen, effectively saying it had no faith in the G20 to offer a co-ordinated solution.

The referendum, a call on Greece's continuance in the Euro zone, and the simmering currency issue has completely altered the agenda of the G20, leaving it with the difficult task of assuring the global financial markets that it has the firepower to prevent the world from slipping into another recession. “We are not sure of the outcome because the nature of the crisis has changed,” said a government official.

The official is accompanying Prime Minister Manmohan Singh on his visit to the French resort to attend the meeting of heads of countries that together command over 85% of the world's GDP.

Global equities gave up a chunk of their October gains, crude retreated, euro dropped and Italian bond yields firmed as financial markets came to grips with the fact that the $130-billion third bailout package for Greece may not help contain the European debt crisis. &quotWe don't know whether the G20 will be able to deliver," said the Indian official, indicating the summit declaration could well be a general statement of intent that would be short on ways to address specific issues.

(...) [artículo aquí]

CHINA IN CANNES

THE G20 WISHLIST FOR CHINA IN CANNES

China Daily, November 2, 2011

BRUSSELS - The stunning call by Greek Prime Minister George Papandreou of a national referendum on aid packages for the debt-laden country made the idea of a China rescue to the European crisis all the more appealling.

After hours of tough negotiations which dragged on to the early hours on Thursday, European leaders had hoped to be joined by heads of other world major economies at the G20 summit this week on an optimistic note.

They had some reasons to: they halved Athens' debt burden, bolster its bailout fund and laid down plans to shore up its banks, in their latest "comprehensive solution" designed to dispel the crisis that has crippled the single-curency zone for nearly two years.

It was the third such comprehensive package this year, each of its predecessors made the debt problem in the euro area even worse.

Nevertheless, the eurozone and markets alike briefly hailed the in-principle success of the European Union (EU).

In an upbeat statement, European Commission President Jose Manuel Barroso said Europe would show its partners in the G20 proposals for a "community way out of this crisis." He added, "We are ready to complete our monetary union with a true economic union."

(...) [artículo aquí]

CHINA TO THE RESCUE

EUROZONE SEEKS BAILOUT FUNDS FROM CHINA

BBC News, October 28, 2011

The head of the eurozone's bailout fund is beginning attempts to persuade China to invest in a scheme to help rescue member countries facing debt crises.

After meeting Chinese leaders, Klaus Regling said there were no formal negotiations and would be no deal now.

It is thought China may pay about 70bn euros ($100bn) into the fund, which is expected to be boosted to 1tn euros.

Meanwhile French President Nicolas Sarkozy said debt-ridden Greece's entry to the eurozone was a mistake.

Greece was "not ready" when it joined in 2001, he said, adding that it could be rescued thanks to a new deal on the debt crisis.

European leaders worked into the early hours of Thursday in Brussels to secure an agreement aimed at preventing the crisis from spreading to larger eurozone economies.

The deal triggered a worldwide shares rally.

'Regular buyer'

Beijing has made it clear that it will demand strong guarantees on the safety of any contribution it might make.

While the head of the fund, Klaus Regling, described this as a regular meeting, it is being seen as the start of a process which could yield an agreement.

With vast reserves, Beijing is certainly in a position to invest but like any other investor China will want to make sure its money is safe.

In the past, overseas investments made by China's sovereign funds have soured leading to criticism back home.

Mr Regling, who is chief executive of the European Financial Stability Facility (EFSF), said he was not negotiating with China as a potential investor but holding consultations to decide the terms for raising the money.

(...) [artículo aquí]

CHINA AND THE EFSF

SARKOZY WINS CHINA COOPERATION PLEDGE

Jonathan Stearns and Helene Fouquet

Bloomberg, October 27, 2011

French President Nicolas Sarkozy conferred with his Chinese counterpart Hu Jintao as European policy makers seek to build support for an enlarged rescue fund designed to resolve the region’s sovereign-debt crisis.

Hu hopes that the measures will help to stabilize markets, state-owned China Central Television reported. The phone call between the leaders came hours after a euro-region summit ended with an agreement to boost the European Financial Stability Facility to about $1.4 trillion, leveraging existing guarantees by as much as five times. Japan plans to support the increase, and is waiting to hear from European officials on details for the program, according to a person familiar with the matter.

Sarkozy’s outreach precedes a Group of 20 summit he will host next week, with Europeans seeking to bolster the role of the International Monetary Fund in overcoming the euro-region’s woes. Australia’s finance chief said that while it’s “appropriate” to look at the IMF’s resources, Europeans must look to themselves first for bailout money.

“The Europeans have their back against the wall and China is the lender of last resort,” Patrick Bennett, a strategist at Canadian Imperial Bank of Commerce in Hong Kong, said in a Bloomberg Television interview before Sarkozy’s call.

The French president’s office said in a statement that Sarkozy and Hu “agreed to cooperate closely to ensure the G20 can make a decisive contribution to ensure growth and global stability.”

(...) [artículo aquí]