Chinese premier warns Europe on finances
Chinese premier Wen Jiabao called on Greece, Spain and Italy to embrace budget cuts and get their finances in order after meeting visiting German chancellor Angela Merkel today.
Mrs Merkel was in Beijing for talks aimed at boosting trade and allaying Chinese fears about Europe's heavy government debts. China has a stake in a resolution because Europe is its biggest export market and Beijing holds billions of dollars in European bonds.
Mr Wen said after the meeting: "The European debt crisis has continued to worsen, giving rise to serious concerns in the international community. Frankly speaking, I am also worried."
He cited uncertainty over whether Greece leaves the eurozone and whether Italy and Spain take "comprehensive rescue measures", a reference to budget cuts and tax increases to balance their budgets.
"Resolving these two problems rests with whether Greece, Spain, Italy and other countries have the determination for reform," the premier said.
"Resolving the European debt problem requires fiscal tightening and finding balance within individual economies."
Mr Wen's comments were unusually pointed for China, which says governments should not interfere in each other's affairs. But the country's leaders are increasingly worried about the safety of their European debt holdings and European economies where Chinese companies are expanding.
He said Beijing is willing to buy European bonds so long as it can evaluate the risks and to help the European Union, International Monetary Fund and European Central Bank - the so-called troika - support indebted eurozone countries "in overcoming hardships".
Mr Wen made a similar pledge of possible Chinese aid to Europe during Mrs Merkel's last visit to Beijing in February.
She said that while the crisis is not over, countries such as Italy and Greece are "on an intensive road of reforms. I am convinced that this will bear fruit".
Greek politicians agreed this week on an austerity package demanded by creditors but are negotiating details.
Mrs Merkel said: "I want Greece to remain part of the eurozone. I have at the same time indicated that credibility is very important in the eurozone. Therefore we expect the programme to be implemented."
Ahead of Mrs Merkel's visit, German officials said Berlin wanted to reassure Beijing that European debt is a "safe and good investment".
Later, Mr Wen and Mrs Merkel presided at a signing ceremony for billions of dollars in business deals - a regular event during visits by European leaders.
Officials of the two governments also signed agreements to collaborate in biotechnology, electric vehicles, agriculture, education, labour and the environment.
Mrs Merkel's two-day visit comes as Beijing is struggling to pull China out of its deepest economic slump since the 2008 global crisis. The government has cut interest rates twice and is pumping money into the economy with a wave of investments by state companies.
An official said yesterday that measures are starting to take effect and growth is "stabilising at a slow pace".
Europe's downturn has battered China's exporters, wiping out thousands of manufacturing jobs.
Exports to Italy plunged 26% in July from a year earlier, while those to even relatively strong Germany were down 6.5%. Exports to France fell 8%.
The trade slump, coupled with weak consumer demand in China, has raised the threat of unrest.