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China looks at life after euro

Nov 10, 2011
China looks at life after euro
By Antoaneta Becker

BEIJING – If Chinese detractors of liberal democracy and unbridled market development ever needed more fodder for their attacks on the West, then last week’s Greek farce provided plenty. But behind the headlines announcing “the collapse of Europe” there is little sense of ideological triumph. Instead Beijing is busy drawing up contingency pans for the break up of the eurozone and absorbing the lessons of welfare state excesses.

Beijing – often at the receiving end of criticism that in its attempts to preserve social stability above all it often tramples on civil rights, did not miss a chance to deride Brussels for its “mantra of stability”.

“The collapse of Europe is irreversible,” declared an editorial in Monday’s 21st Century Business Herald. Rather than admitting that Greece was bankrupt and would never be able to repay its debts, it said Europe had instead “thrown its principles out of the window.”

“Stability prevails over principle” was just another sign of the “degradation of the European spirit,” the editorial said.

Not long ago it was Brussels that lectured Beijing on its economic management, but now Chinese leaders see it as their duty to admonish the European Union. Even before last week’s Cannes fiasco and its public display of the EU’s inability to follow through on the rescue plan of the eurozone it had painstakingly designed, Chinese premier Wen Jiabao had issued some stern warnings.

“The most urgent task is to take decisive measures to prevent the debt crisis from spreading further and avoid financial market turbulence, a recession and fluctuation in the euro,” Wen told European Council President Herman Van Rompuy in a phone call two weeks ago. In marked contrast with Beijing’s repeatedly voiced confidence that Europe can overcome its problems, Wen’s comments sounded sobering.

“Apart from urgent measures to address these problems, the key is to undertake systematic and fundamental fiscal and financial reform,” Wen said, according to a report on the Chinese Foreign Ministry website.

But after the Cannes meeting Beijing seems to have lost its confidence that Brussels has what it takes to undertake the fundamental reforms needed. The Cannes G-20 summit originally designed to put the final touches to Brussels eurozone rescue plan and entice emerging economies like China to dip into their foreign currency reserves and provide capital for Europe’s bailout fund unraveled with the Greek prime minister’s announcement then that he needed a national referendum to approve the bailout program.

The summit concluded last Friday without any concrete results. Even though Greek Prime Minister Papandreou withdrew his referendum idea later, and after he won a parliamentary vote of confidence, the damage had been done. The political uncertainties meant that neither China nor any other country could agree to join the European bailout.

To say that Chinese analysts have been perplexed at what transpired at the Group of 20 Cannes summit is an understatement.

“If a small country like Greece with an economy that accounts only for 3 percent of the EU’s economy can derail the whole union and kidnap a summit of the world powers, this says something about the deficiency of the EU’s political and economic integration,” says current affairs commentator Xia Wenhui.

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