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27th Jul 2016

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Chinese official: Eurozone collapse would be a 'disaster'

  • Time is running out for euro-leaders, Beijing warns (Photo: Jorge Rodriguez)

A collapse of the eurozone would be a "disaster for everyone" and EU leaders have not "fully realised" the urgency of the situation, a Chinese official said Tuesday (29 November), adding that Europe's problem is not so much money-related as a matter of lack of confidence.

"We don't want to see the collapse of the eurozone, it would be a disaster for everyone. We want to see a very quick recovery of the eurozone. China is a very firm believer in the euro, in European integration," Hua Chunying, a foreign ministry counsellor dealing with EU affairs told this website on the margins of the Understanding China policy summit.

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China has invested in bonds of the troubled southern euro-countries already. "But the major problem with the EU is not the money, it's the confidence," she explained.

This lack of confidence is "natural" given the diversity between north and south, poor and rich countries, Hua said, adding: "But I do believe once everybody realises it's a problem of life and death of the euro, then they may take very rapid measures."

A 'core' or northern eurozone splintering off with a stronger currency is not viable, in the Chinese official's view. "They can only go as one area. It's not a matter of choice, it's a strategical asset. Europe for a long period in history used to be the pillar and source of stability and we hope it will continue to be so," she stressed.

Asked if the Chinese government is preparing any contingency plans for a eurozone break-up, Hua said: "No, we don't want to see that. Everybody will suffer if that happens."

Meanwhile, Wang Yiming, a Chinese official from the National Development and Reform Commission, spelled out that instead of asking for money, Europe should provide market access to Chinese companies.

"The European economy needs blood, but the way forward is not by asking China for blood. We need to create new blood together rather than to transfer some," he said at the conference.

Eurozone leaders had been hoping that China and others would help boost the single currency's bailout fund. But a meeting of G20 leaders earlier this month saw no offers forthcoming.

Lord Leon Brittan, a former EU commissioner and currently vice chair of UBS Investment Bank, also warned against the EU asking for Chinese financial assistance, but for different reasons.

"It would be a great mistake to ask for Chinese assistance in this crisis, because if you ask for money, there are always political conditions attached," he said.

Beijing in recent days has signalled that it would be willing to invest in infrastructure and state assets in Europe, but is still waiting for the prices to go down.

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