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6th Dec 2022

China: 'You can't depend on us alone to rescue Greece'

  • China would buy euro-bonds, if they were to be issued (Photo: dolmansaxlil)

A 'regular' phone call between European Commission chief Jose Manuel Barroso and Chinese Prime Minister Wen Jiabao on Friday morning (2 September) was aimed at reassuring markets that China will continue to support the ailing eurozone.

Flagging up the phone call in a regular press briefing, commission spokesman Alejandro Ulzurrun said that it focused on the current measures being taken to consolidate the eurozone and on the upcoming EU-China summit on 25 October.

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"Wen expressed his support for the actions under way in Europe," Ulzurrun said, without going into details.

Since the beginning of the euro-debt crisis, China has propped up troubled countries such as Greece, Spain, Portugal and Italy through bond purchases. But as the July deal on a new Greek bail-out has opened the possibility of investors taking a 'voluntary' haircut on their investments, ratings agencies have lowered their expectations for other troubled eurozone countries, including Italy and Spain, the bloc's third and fourth largest economies, for fear that they may also face a 'partial' default.

Speaking to the EUobserver, Chinese embassy spokesman Wang Xining said that his government is "considering buying more bonds, but this depends on the performance of those bonds, on commercial considerations."

"We want to see that the eurozone is in a good shape and are willing to offer assistance in various formats, but huge sums for bonds are not realistic. You can't depend on China alone to rescue Greece."

As for the idea of eurobonds, a prospect still fended off by Germany, Wang said that China would be interested in purchasing them, were they to be offered. "But each deal will be decided on economic grounds," he added.

In its assessment whether to buy a particular bond or not, the Chinese government is taking into consideration the recommendations of credit ratings agencies, but "also the political willingness to do structural reforms" and the advice from central bankers. "It is wiser to make judgements on the basis of wider opinions, not only ratings agencies," he noted.

"The economic fundamentals in Europe are still sound and there is a great potential for the economy to pick up again and grow, provided structural changes and budget controls are put in place," the spokesman concluded.

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