China and EU begin negotiations, to outline world's economic future
Optimistic and purposeful declarations, but nothing concrete, after the meeting between the EU financial chief Regling and Chinese financial authorities. Europe requests robust lending from Asia, Beijing ponders what advantages there are to be had. Positions on key issues remain distant, high risk of more stock market instability.
Beijing (AsiaNews / Agencies) - Optimistic and purposeful declarations, but nothing concrete, from yesterday’s meeting in Beijing between Klaus Regling, head of the European Financial Stability Facility (EFSF), with Chinese financial authorities. The two sides are trying to take full advantage of negotiations and reciprocal concessions that everyone expects, but any delay in decisions could depress stock markets.
Zhu Guangyao, Chinese Vice-Minister for Finance, said after the meeting that China needs more time to study the details of the EFSF program "before deciding on investment." A legitimate request, since the "rescue" program was announced on October 27 after a night of negotiations and that Regling had announced that the arrangements for the purchase and management of EFSF securities have yet to be defined. One of the two solutions agreed to upgrade ' EFSF provides a new special fund open to investment from emerging economies and the IMF to buy bonds on secondary markets. But many hoped that Beijing would at least release a statement of willingness to finance the program. Instead, China has taken its time and Zhu also added that the purchase of European EFSF titles "should be" among the topics of the next G20 summit in France.
A signification stance, given that Cui Tiankai, Deputy Foreign Minister, said that the G20 should talk about stability of financial markets and the foreign debt crisis, the very problems that the EU wants to deal with the EFSF . Beijing appears to want to highlight Europe's inability to solve the current problems by itself, to get the international recognition that for aid to these levels there must be adequate compensation, for example, with "a greater influence of emerging economies" in the IMF, as Cui also mentioned.
Besides, Robert Zoellick, World Bank president, warned that "China will not be a white knight that will bring money just to help the European countries", but will do so only for appropriate incentives.
Among the measures adopted by Strasbourg to address the external debt crisis of some EU member states there is also the prevision that the rescue fund must arrive at more than one trillion euros by the end of November and all believe that the euro area does not have or is unwilling to commit to the entire sum by istelf. So the help of China is crucial.
In turn, the EU wants to get the maximum and Regling, who flew immediately to Beijing, before the meeting recalled that in 2011 Asia has bought about 40% of the EFSF securities. Figures that appear far greater than the 70 billion Euros that various sources had indicated to China. China has currency reserves and foreign securities for more than 3 trillion Euros. Now the specific demands of Beijing are yet to be seen, which could also demand concessions on trade or less criticism in matters such as violation of human rights.
The rest of Europe is still divided on negotiations and therefore weak. French President Nicolas Sarkozy yesterday called the 2001 entry of Greece into the euro zone "a mistake".
However, Beijing can not refrain from taking some action: the EU is its main trading partner and a crisis in Europe not only brings down the world's stock markets, but has a direct effect on Chinese exports, including the risk of protectionist policies. Although China is the second largest world economy, more than 200 million Chinese live below the poverty line (less than a dollar a day) and its economy is still dependent on exports, whose collapse would have a direct impact on the incomes of tens of million Chinese.
But taking to long over reaching a deal could depress stock markets. The Hong Kong index and those in Asia in general this week showed the best results from about 30 months, thanks to the confidence that the EU will emerge from the crisis. But European stock markets, after the euphoria of October 28, were already down yesterday, as if waiting to see the real prospects of anti-crisis measures. (PB)