China has stressed it will not be a "savior" to Europe as President Hu Jintao embarks on an official visit to the continent that will take in this Thursday's crucial G20 summit in Cannes The warning came as European Commission President Jose Manuel Barroso and European Council President Herman Van Rompuy urged G20 leaders to use the meeting of major economies to address Europe's debt crisis, saying measures proposed last week were not enough by themselves. French President Nicolas Sarkozy has said Beijing had a "major role to play" in proposals to expand the European Financial Stability Facility (EFSF) to €1 trillion (£877bn), possibly through a special purpose investment vehicle that would attract backing from sovereign wealth funds. The head of the bail-out fund, Klaus Regling, was dispatched to Beijing to discuss terms, but traveled on to Japan at the weekend without an agreement. China, holder of the world's largest foreign exchange reserves at $3.2 trillion, said it wanted more clarity before investing. The official Xinhua news agency, used to communicate Communist Party policy, said Europe must address its own financial woes. "China can neither take up the role as a saviour to the Europeans, nor provide a 'cure' for the European malaise," it stated. "Obviously, it is up to European countries themselves to tackle their financial problems." 
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Sunday, October 30, 2011
China has stressed it will not be a "savior" to Europe as President Hu Jintao embarks on an official visit to the continent that will take in this Thursday's crucial G20 summit in Cannes The warning came as European Commission President Jose Manuel Barroso and European Council President Herman Van Rompuy urged G20 leaders to use the meeting of major economies to address Europe's debt crisis, saying measures proposed last week were not enough by themselves. French President Nicolas Sarkozy has said Beijing had a "major role to play" in proposals to expand the European Financial Stability Facility (EFSF) to €1 trillion (£877bn), possibly through a special purpose investment vehicle that would attract backing from sovereign wealth funds. The head of the bail-out fund, Klaus Regling, was dispatched to Beijing to discuss terms, but traveled on to Japan at the weekend without an agreement. China, holder of the world's largest foreign exchange reserves at $3.2 trillion, said it wanted more clarity before investing. The official Xinhua news agency, used to communicate Communist Party policy, said Europe must address its own financial woes. "China can neither take up the role as a saviour to the Europeans, nor provide a 'cure' for the European malaise," it stated. "Obviously, it is up to European countries themselves to tackle their financial problems." 
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The reality facing the G20 as it meets in Cannes on Thursday is that austerity plus muddling through has been a disaster. There are still those who think that the global economy is simply going through a soft patch and they can point to some recent encouraging developments: the apparent bottoming out of the US housing market and the peak in Chinese inflation. But the downside risks that the International Monetary Fund warned about at its annual meeting only five weeks ago already loom larger than they did in late September. The G20 should not be focused this week on what could go right over the next 12 months but on what could go wrong. And this can be summed up simply as recession, trade wars and the disintegration of the euro. A good start would be to rekindle the spirit of 2008-09 and intervene decisively and collectively. It would certainly be regrettable were the summit to settle for the lowest common denominator – doing too little too late, as the euro zone has throughout its crisis. The package of measures produced by Brussels last week was a classic case of fighting the last war. Rising Italian bond yields suggest this deal will be unpicked by the markets over the coming weeks and months, with dire consequences, according to some City analysts. Of course growth is key. But it has to be the right sort of growth, not the sort of growth that you purchase with borrowed money. The sort of growth that has been at the forefront of western economic policies for decades. If borrowing and spending was the answer, the west wouldn't have a problem . After all, that's what the western economies have been built on. A budget deficit IS stimulus, excess private debt fueling economic activity IS a stimulus, corporate debt IS stimulus and QE IS stimulus. When your economy is totally reliant on stimulus that is proving to be absolutely unsustainable, the solution isn't more of the same. It seems to me that if you continue to borrow and spend when the western world is already facing a sovereign debt crisis the only thing that will happen is that you hasten your own demise. Actually, that may not be so bad, its going to happen anyway, might as well get it over and done with I guess.
China have just acquired SAAB, allegedly. They already own Volvo. Two great brands. The Chinese also build high speed trains.China is a dictatorship that tramples human rights underfoot. They are racist. They are 35-40 million girls short having practiced gendercide. We must not be
Why dont the EU get its house in order and compete by scrapping all the namby pamby HR regulations and calling the chinese a currency manipulator and sticking a 50% tariff on their imports.
Nice to see yet another advocate for infrastructure improvements. At least that beats digging holes to fill them in again, as the man said, but it does conjure up images of new roads and railways connecting up ghost and phantom estates. There is a strong sense in which the bubble in infrastructure spending which gave us the ghost estates lies at the core of the banking crisis. It was lending to finance this nonsense in Spain, Ireland and Portugal that got the banks into trouble. Ironic that its the only way we can see to create the jobs to provide a solution.
That's why it is called the paradox of thrift! What's good for you i.e. getting your personal debt down is not good for everyone, because if you pay down debt you consume less of other people's products and their incomes suffer. Somewhat analagously keeping German living standards and personal indebtedness in check has made it difficult for other countries to grow and export, so what is good for Germany, in isolation, is not good for Europe as a whole and Germany is now footing the bill for the countries it sold to and which now cannot repay what they borrowed. Greek indebtedness and German export efficiency are two sides of the same coin.
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