Uneasy money? [By Jiao Haiyang/China.org.cn]

Unlike the beautiful flowers, which look the same every year, the topics discussed at the G20 summit change continually. At this year's Summit in Cannes, France, G20 leaders are required to discuss one issue that has never been talked about before: how to deal with the on-going debt crisis in Europe.

The European debt crisis, which first broke out in Greece in October 2009, has steadily grown over the last two years, and now threatens to disintegrate the Eurozone and destroy the ideal of European integration. As Jean-Claude Trichet, who was, until very recently, President of the European Central Bank put it, "it is undoubtedly a historic event of the first magnitude, the worst financial crisis since the Second World War. It could have produced a Great Depression, had appropriate decisions not been taken at the appropriate time."

So the question on everyone's lips is: who can save Europe?

The G20 Summit in Cannes convened with the great hope that real solutions could be formulated by the clever brains of the leaders of the world's most important economies. French President Nicolas Sarkozy told journalists that it is vital the Eurozone sends the world a message of credibility. To many people's disappointment, however, the Summit only expressed its wish that the crisis should be resolved as soon as possible. As the Summit Communiqué reads: "We welcome the decisions by European Leaders on October 26th, 2011 to restore debt sustainability in Greece, strengthen European banks, build firewalls to avoid contagion, and lay the foundations for robust economic governance reform in the Euro area and call for their swift implementation."

As the largest economy in the EU, Germany has been asked to make a greater contribution to the solution of the crisis. However, due to domestic political factors, German Chancellor Angela Merkel has failed to meet the expectations of people around the world. Some commentators feel that Chancellor Merkel's inability to play a more central role in leading Europe out of the crisis has something to do with her personality. There have been suggestions that, as a trained physicist, she tends to wait for others' suggestions first.

Enter China. No one would believe that a country, which had a huge population of poor people only 30 years ago, is now being asked by people around the globe to save Europe.

This expectation sounds logical: China has become the second largest global economy, with US$3.2 trillion in foreign exchange reserves. According to The Economist (April 14, 2011), China, as "a triple trillionaire", is able to buy the world's projected oil output this year at $3.41 trillion, or all the US farms at $1.87 trillion. It could also buy the total amount of the sovereign debts of Portugal, Ireland, Greece and Spain at $1.51 trillion, or Apple, Microsoft, IBM and Google at $916 billion. Further still, China could purchase US military equipment at $414 billion, Manhattan real estate at $287 billion, or Washington real estate at $232 billion. Finally, The Economist reported that China could, if it wanted, buy, the world's 50 most valuable sports teams at $50 billion.

It is also interesting to note that even inside China many people, particularly netizens, are debating whether China should save Europe or not. Some say that it is time now for China to show its economic strength, as it needs only part of its huge foreign reserves to save Europe from sinking further into the debt crisis. But others argue that China should not be seen as a sugar daddy as it is still a developing country and should take care of its own people first. Still others say that China should not give money to Europe, due to Europe's stubborn refusal to grant market economy status to the rising Asian country. Europe still maintains its arms embargo and even intervenes in Chinese internal affairs on the Tibet and Taiwan issues.

As a matter of fact, the meaning of "save" or "救"[jiu, fourth tone] in this regard can be defined in two ways: to pull Europe out of the debt crisis with all the money from China, or to offer a helping hand by purchasing bonds, making more direct investment, and importing more goods.

Needless to say, the first definition of "save" does not apply. As many people point out on the Internet, it is unrealistic to shift the burden of solving the crisis from Europe itself onto external players. However, the second definition of the word "save", seems a more appropriate course of action for China. China and the EU have built the so-called Comprehensive Strategic Partnership. When one partner is suffering economic hardship, the other has a responsibility to help. A friend in need is a friend indeed.

Subjectively, China's help can lessen Europe's suffering; objectively, purchasing European bonds or making more direct investment in Europe benefits China's strategy of diversifying its foreign exchange reserves.

Having said that, we have to understand that, based on how Latin America and East Asia dealt with their past debt and financial crises, although external assistance is vital, the key to a successful and rapid solution of any economic disaster is in the hands of these countries themselves.

The author is a columnist with China.org.cn. For more information please visit http://www.ccgp-fushun.com/opinion/jiangshixue.htm

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