Chinese Leader Warms To Eurozone Bailout

(EurActiv) — Chinese Prime Minister Wen Jiabao says Beijing is considering greater involvement in the eurozone’s rescue funds, the temporary European Financial Stability Facility (EFSF) and the upcoming European Stability Mechanism (ESM).

Wen made the comments yesterday (2 February) at a joint news conference with visiting German Chancellor Angela Merkel in Beijing, without making explicit financial commitments. He said China, which has made similar positive but non-committal comments in the past, is still studying how it might lend further support.

Simultaneously, ambassadors representing the 17 eurozone member states signed the ESM Treaty in Brussels, paving the way for the €500-billion permanent bailout fund to become operational in July.

The ESM is expected to replace the EFSF, a temporary fund that has been used to bail out Ireland and Portugal and will help in the second Greek package.

Wen said it was important to resolve the euro debt crisis and Beijing wanted to support Europe’s efforts in stabilising the euro. But he also put the onus firmly on the Europeans to cut their debt, introduce structural economic reforms and rely on themselves.

Wen did not say whether China would participate in the fund-raising by the International Monetary Fund, although he said he supported a bigger IMF role in addressing Europe’s debt crisis.

Merkel told reporters that Chinese leaders again stressed in their discussions that European leaders must do their homework first to resolve the eurozone crisis.

Ahead of Merkel’s visit, few analysts expected her to come away with specific commitments and instead characterised the visit as a confidence-building effort as Germany seeks Beijing’s support for the ailing euro.