China paper urges Europe get act together on debt crisis

BEIJING Sat Oct 1, 2011 3:14pm EDT

A woman pulls her shopping trolley in front of a closed shop in central Lisbon August 11, 2011. REUTERS/Jose Manuel Ribeiro

A woman pulls her shopping trolley in front of a closed shop in central Lisbon August 11, 2011.

Credit: Reuters/Jose Manuel Ribeiro

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BEIJING (Reuters) - European countries must act decisively to resolve the euro zone debt crisis or risk having some member states forced out of the single currency, China's top newspaper said in a front page commentary on Saturday.

The call came in the overseas edition of the People's Daily, the official paper of the ruling Communist Party.

While such a piece does not amount to the official government line, it underscores the worries in Beijing about the safety of its investments in the euro zone.

"Europe is standing at a crucial juncture in its history. It must show great wisdom, great boldness and great resolve, and genuinely go into action," the commentary said.

"If it is able to set up a fiscal union, Europe can still turn its luck around. If the decision comes too late, some (euro) members may be forced to pull out."

While that outcome would be painful, it could work if the countries still remained in the European Union, added the commentary, whose author was identified as Qin Hong, an expert on international studies.

"But if Europe keeps dilly-dallying, the situation can only worsen and gather speed. Outsiders who want to help will not dare, and then the euro zone may really disintegrate. Without doubt, this would be a huge disaster for Europe and the world."

China's pile of $3.2 trillion in foreign exchange reserves, the biggest in the world, keeps growing thanks to trade surpluses and capital inflows.

Analysts estimate that China holds about a quarter of its foreign exchange in euro assets, and there are few other places for it to park investments of such a scale.

The government has said it has confidence in the euro and in the EU's efforts to tackle the crisis. But a chorus of voices has revealed anxieties about the security of euro assets.

China remains willing to invest in Europe but wants rich economies to show they are serious about tackling debt, Premier Wen Jiabao said last month, sending the euro zone a mix of reassurance and demands.

There has been debate in the EU about changes to treaties to facilitate deeper fiscal union and better deal with the crisis.

The People's Daily said that with huge differences in the economies of euro member states, especially in the north and south of Europe, this plan would not be easy to implement.

"Leaving aside how enlightened that plan may be, Europe's efforts to put it in place have been too sluggish. A failure to act when they should will certainly cause more trouble, and the euro zone's problems are now getting greater and greater."

(Reporting by Ben Blanchard; Editing by Ron Popeski)

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Comments (5)
China_Lies wrote:
It makes me wonder if china is going to accept the same kind of lectures once the china property bubble pops, leading to increased bad loans in the chinese banking system, which will inevitably lead to a chinese financial crisis.

Or, once the tables are turned on china, will they lash out with their typical “don’t meddle in our internal affairs” hogwash.

It will be interesting to watch.

Oct 01, 2011 1:39am EDT  --  Report as abuse
thiet wrote:
while the eurozone crisis is affecting the whole world deeply,the so-called chinese internal affairs are none of the those’s business.and above all,how can u start to blame someone who haven’t or maybe will never make any mistakes.so China_Lies’ words are undoubtedly hogwash

Oct 01, 2011 4:17am EDT  --  Report as abuse
Gillyp wrote:
How about Europe puts on huge trade tariffs with china/bric …then we can go back to work instead of importing their low quality goods.Globalization hasn’t done me any favors.

Oct 01, 2011 4:38am EDT  --  Report as abuse
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