China's Hu says Europe can solve its economic woes

Reuters News
Posted: Oct 31, 2011 5:40 PM
China's Hu says Europe can solve its economic woes

By Sylvia Westall

VIENNA (Reuters) - China believes Europe can overcome its economic problems, President Hu Jintao said on Monday, without mentioning whether Beijing will play any major role in helping to solve the euro zone's debt crisis.

Cash-rich China has already expressed confidence that Europe can survive its debt crisis, but has made no public offer to buy more European government debt while it awaits details on investment options for the euro zone's EFSF rescue fund.

"We are following the economic development under the current difficulties with attention," Hu told reporters through a German translator after meeting Austrian counterpart Heinz Fischer on a state visit.

"We are convinced that Europe has the wisdom and has the competence to overcome the current difficulties," added Hu, who will attend a summit of Group of 20 (G20) leading economies in France later this week.

Klaus Regling, head of the EFSF (European Financial Stability Facility), tried at the weekend to entice China into investing in the bailout fund by saying investors may be protected against initial losses and that bonds could eventually be sold in yuan if Beijing desires.

Hu said economic uncertainties were of importance to the international community, especially in big economies, and that it was vital to foster growth, stability and greater cooperation.

Fischer said he had agreed with Hu on the importance of the G20 meeting and said he had used the talks on Monday to highlight the theme of human rights. "We pointed out which duties Austria has regarding human rights because of our membership of the U.N. (human rights) commission," Fischer said.

China's trade minister Chen Deming, also in Vienna, promised Europe "active support," according to comments carried by the Austria Press Agency (APA). There were no details.

"All countries are in the same boat, we must stick together so that Europe recovers," Chen was quoted by APA as saying at an Austrian-Chinese economic forum.


In a commentary on Monday, state-run Chinese news agency Xinhua used the same metaphor of the world as a storm-tossed ship that would leave no one unscathed if it capsized.

"The Chinese government has also said repeatedly that as a long-term investor in European sovereign debts, China will continue to support Europe and the euro," Xinhua wrote.

"This will create a win-win situation for China and Europe, as it will not only give firepower to European countries to combat the debt crisis, but diversify China's foreign exchange reserves and improve their safety."

Xinhua on Sunday had commented that Europe should not expect China to ride to the rescue as its "savior" from the debt crisis, although Beijing would do what it can to help a friend in need.

Regling has declined to comment on his meetings in Beijing but said he expected to submit a proposal on how to scale up the 440-billion-euro ($623.7 billion) EFSF fund by November.

Expanding the EFSF to 1 trillion euros is central to the euro zone's latest anti-crisis plan, put together at a summit last week. Details have yet to emerge and European leaders are under pressure to show the plan can work.

Regling was visiting China after the euro zone leaders struck the deal to boost the EFSF's firepower, recapitalize banks and reduce Greece's crippling debt burden.

Japan told Regling on Monday that it would continue to buy EFSF bonds but, like China, it did not commit itself to putting cash into a mooted special purpose vehicle to enhance the rescue fund's firepower.

(Additional reporting by Michael Shields; editing by John Stonestreet and Philippa Fletcher)