It is in the interest of cash-rich China to help resolve the eurozone debt crisis, but Chinese premier Wen Jiabao, who is visiting Britain and Continental Europe, will want a share of the West’s buying power in return .
Yesterday, at the start of his European visit in Hungary, Mr Wen gave a strong pledge of China’s support for the embattled euro, saying that China will buy Hungarian government bonds and “consistently” support the euro as Europe attempts to fight its way out of a sovereign debt crisis. “China is a long term investor in Europe’s sovereign debt market,” he said at a press conference with the Hungarian Prime Minister, Viktor Orban. “In recent years we have increased by quite a big margin our holdings of government bonds. We will consistently continue to support Europe and the euro.”
Whilst in the UK, the Chinese are determined to be aggressive with their British counterparts in private discussions during three days, demanding access to every area of UK technological expertise. China feels it now has the whip hand, after years of eyeing the West with suspicion. The West’s need for Chinese goods and investment (China has a significant current account surplus) are increasingly outweighing concerns about the way China does business or the low value of its currency. The UK knows it has to compete for business with other EU members as well as North and South America, the rest of Asia, Australia and Africa.