Eurozone crisis

Chinese saviour is in debt too

Published on 31 October 2011 at 13:01

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And what if China can’t help Europe? On the day Chinese President Hu Jintao is visiting Austria Die Presse warns against “false hopes of a Chinese saviour.” The financial clout that China wields abroad can’t hide the problems the Beijing government is facing inside its own country, writes the Vienna daily.

China, it turns out, is at risk of an explosion of debt. In 2008 it initiated “a massive stimulus package equivalent to 440 billion euros that was meant to protect the country from the financial crisis triggered in the United States.” The catch: only 133 billion came from the state budget. The rest was loaned by banks, state enterprises and individuals. “Today, not just huge cities like Shanghai or Beijing but thousands of smaller cities and towns as well are deeply in debt to the state banks.”

China’s official newspaper China Daily affirms that “China cannot be Europe's saviour, nor be a cure-all for its ills, but it will do what it can to extend a helping hand as a friend. But friendship is a two-way street. China has already invested significant sums in European bonds and would like guarantees that its investment is safe.”

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