Eurozone crisis

Beijing tells Merkel “to do her homework”

Published on 3 February 2012 at 14:10


Angela Merkel was outgunned in Beijing. “People’s Republic of China gets rid of Chancellor,” headinesHandelsblatt, in its report on Angela Merkel’s three-day visit to the Middle Kingdom, during which she was hoping to solicit help from China to save the euro. Beijing is considering participation in a solution to the crisis but it does not plan on losing money. Prime Minister Wen Jiabao coldly announced that there would be no promises to Europe of direct investment,” reports the economic daily. “Indebted countries will first have ‘to make painful decisions and do their homework.’” That is to say, as Handelsblatt explains –

…reduce debt, reinforce control mechanisms and adopt a clear, frank and reliable position with regard to the rest of the world. […] The money China wants to invest in Europe should not be viewed as development aid but must be a successful investment. And in a best case scenario this means both from an economic and a political point of view.

From Germany’s point of view, China could play a key role with its 3.2 trillion dollars of foreign currency reserves. However, Frankfurter Rundschau points out that the People’s Republic will expect a gesture from Europe in return: for example –

EU recognition of China’s status as a market economy, which would make it more difficult for European companies to take action against unfair competition or price dumping.

As a result, Handelsblatt remarks: the Chancellor, who can claim to be the leader that the Chinese believe “has taken charge of the drive to restore the euro,” had no opportunity to promote bi-lateral relations as she had planned, and will now have to wait for further meetings later in the year to extract promises from the Chinese Prime Minister.

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