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20th May 2019

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China central banker: EU is our biggest uncertainty

  • The EU is China's biggest trading partner (Photo: stuck_in_customs)

In a sign of growing confidence on the global stage, China on Monday (12 March) singled out Europe as the "biggest uncertainty" for the future of its economy.

The governor of China's central bank, Zhou Xiaochuan, said that a slow world recovery process and the unstable economic and financial situation in Europe will be the big unknowns for China's economy this year.

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Speaking on the sidelines of the National People's Congress in Beijing, Zhou was quoted by Reuters as saying that "the biggest uncertainty in the international economic situation, as we all know, is the economic recovery process, especially the European economy and financial market development relating to the euro sovereign debt crisis."

The comment has sparked a mix of reactions from commentators in Brussels.

"It is amazing," says Pierre Defraigne, director of the College of Europe Madariaga Foundation and a long-time scholar on EU-China relations. "I don't remember someone of such a high level speaking so bluntly."

He says that the comment reveals a painful truth that European leaders are afraid to admit.

"The EU has become the main source of uncertainty in the global economy. We should be thankful to the [central bank's] governor for telling us that the emperor has no clothes on."

Lin Goethals, programme director at the European Institute for Asian Studies, says that the comment represents a new phase in EU-China relations.

"It used to be the other way around," she says, "Europe bashing China."

But ever since the financial crisis, and in particular since the EU saw it necessary to postpone an EU-China summit in October due to a rapidly deteriorating situation at home, the tables have been turning, she says.

"Honestly, I am not surprised. It is actually something China is really worried about."

The EU is China's biggest trading partner. China is the EU's second-biggest trading partner, after the US. But relations between the two economic powerhouses have soured of late.

The central banker's comment comes amid several ongoing trade wars including in aviation, public procurement and, most recently, rare earth elements.

China's embassy to the EU, meanwhile, is eager to downplay the comment.

Zhang Kening, minister counsellor for economic and commercial affairs, told EUobserver that there has been "a misinterpretation" of the governor's words due to a lack of direct interpretation into English.

In reality, he says, the governor spoke of the world economy and the European financial situation as uncertain factors influencing China's currency policy.

For its part, the European Commission at the time of writing had not yet heard of the banker's comment and was not able to comment.

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