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Chinese prime minister offers support for euro

Sat Jun 25, 2011 7:03 AM EDT
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Pablo Gorondi, Associated Press

Chinese Prime Minister Wen Jiabao, left, and his Hungarian counterpart Viktor Orban shake hands at the end of their press conference following their talks in the Parliament building in Budapest Saturday, June 25, 2011. The Chinese Prime Minister is on a two-day official visit to Hungary. (AP Photo/MTI, Laszlo Beliczay )

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BUDAPEST — Chinese Prime Minister Wen Jiabao has offered his country's support for Europe and its common currency amid the eurozone's debt crisis.

Wen says China is a long-term investor in the European sovereign debt market and has purchased a "not small" amount of euro-denominated bonds in the past years.

Wen says China will offer "consistent support for Europe and the euro."

Wen, on a five-day tour of Hungary, Britain and Germany just as Europe hammers out a plan to battle the eurozone debt crisis, met Saturday in Budapest with Hungarian Prime Minister Viktor Orban.

Wen says China is also willing to purchase bonds issued by Hungary, which does not yet use the euro, and offered Hungary a loan of 1 billion euros ($1.4 billion).

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BXURZ

There may be no end in sight for Europe's sovereign debt crisis, but at least one country still believes in the euro. The Chinese leadership has promised its support for the euro zone in its hour of need as part of a charm offensive aimed at strengthening ties with the European Union.

In recent months, China, which has foreign-exchange reserves worth an estimated $2.5 trillion, has been buying up bonds from troubled euro-zone members such as Greece and Portugal. Beijing is seen as wanting to diversify its investments out of fears of a devaluation of the US dollar. Currently around 70 percent of its foreign-exchange reserves are believed to be in the US currency.

In its cover story on China's rise this week, SPIEGEL reports that, in a meeting with Chinese Premiere Wen Jiabao, Jürgen Hambrecht, the CEO of German industrial giant BASF, complained of the "forced disclosure of know-how in exchange for investment decisions." He added: "That doesn't conform entirely to our expectations for our partnerships."

Indeed, many German firms fear that, through massive Chinese subsidies as well as the know-how obtained through joint ventures with Western partners, China could soon surpass the West in the high-tech sector.

http://www.spiegel.de/international/europe/0,1518,737897,00.html

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