In the occasion of Germany’s Angela Merkel’s visit to China on 3rd February 2012, Chinese premier Wen Jiabao stated that “China does not want to buy Europe”. While unusual in international diplomacy, Chinese officials obviously felt such a statement was needed to assuage concerns over potential Chinese investment in the Eurozone’s debt crisis. The fact that the Chinese government felt urged to underscore “that China doesn’t have this intention, and neither has the capacity” shed a light on the growing ambiguity of Europe-China relationships.
During troubled times for Europe, China’s influence in the global financial system is indeed growing fast – not least because of Europe’s weakness. With a huge trade surplus of more than 300 billion dollars and a foreign exchange reserve of more than 3000 billion in dollars and other currencies, including the euro, the yen and the pound, China has emerged as key player in the European debt crisis.While its influence on the US was already huge before the recent crisis, given the amounts of dollar reserves and trade surplus China holds with its Pacific rival, Europe could be the next geopolitical zone to become dependent on it. Will China rescue the staggering Europe, as Western politicians desperately implore? Will the Golden Dragon be a Good Samaritan for the Eurozone in particular, by investing in the European Financial Stability Facility EFSF as a whole, or separately in the debts of single European countries like Italy, Greece, Ireland, Portugal or Spain?
To say that both Europe and China have mixed feelings about this aid is an understatement. Both sides have been hesitating for months while discussing plans of cooperation and aid, which in turn has ironically hurt their relationship with each other. On the one hand, China is seen as both a rescuer and a threat by Europeans who are in desperate need of funds, but remain at the same time worried about losing their independence and security. On the other hand, China seems undecided too. On December 2nd, 2011, China officially refused to participate in the Euro Rescue Funds with its foreign exchange and gold reserve, pointing out that its constitutional law forbids even to the Chinese government to use it to mitigate their own rising social inequality. At the same time, Chinese elites have continued to send positive signals to countries like Greece, Portugal, Ireland and Spain, saying that China is available to help by using a number of options including using part of their trade surplus with these countries for re-investment in their governmental debt bonds. Although some European leaders fear a “divide et impera” strategy behind this country by country approach, individual arrangements are not off the table. On the contrary, in the occasion of Angela Merkel’s visit to China in February, they were again brought to the table by both German and Chinese leaders.