BEIJING (AP) — Expressing alarm at Europe’s debt problems,
Chinese Premier Wen Jiabao called on Greece, Spain and Italy to embrace budget
cuts and get their finances in order after meeting Thursday with visiting
German Chancellor Angela Merkel.
Wen said Beijing is willing to
keep buying European bonds but gave no sign Beijing will bail out the eurozone.
Merkel was in Beijing for talks
aimed at boosting trade and allaying Chinese fears about Europe’s heavy
government debts. China has a stake in a resolution because Europe is its
biggest export market and Beijing holds billions of dollars in European bonds.
“The European debt crisis has
continued to worsen, giving rise to serious concerns in the international
community. Frankly speaking, I am also worried,” Wen told reporters. He cited
uncertainty over whether Greece leaves the eurozone and whether Italy and Spain
will take “comprehensive rescue measures,” a reference to spending cuts and tax
increases to balance their budgets.
“Resolving these two problems rests
with whether Greece, Spain, Italy and other countries have the determination
for reform,” the premier said. “Resolving the European debt problem requires
fiscal tightening and finding balance within individual economies.”
Wen’s comments were unusually
pointed for China, which says governments should not interfere in each other’s
affairs. But the country’s leaders are increasingly worried about the safety of
their European debt holdings and European economies where Chinese companies are
expanding.
Wen said Beijing was willing to
buy European bonds so long as it could evaluate the risks and to help the
European Union, International Monetary Fund and European Central Bank — the
so-called troika — support indebted eurozone countries “in overcoming hardships.”
Wen made a similar pledge of
possible Chinese aid to European bailout funds during Merkel’s last visit to
Beijing in February but it is unclear what the communist government has done.
The European Financial Stability
Fund, set up to lend to troubled governments, says China and other Asian
investors have bought 40 percent of its bonds but has released no other
details.
Merkel told reporters that while
the crisis is not over, countries such as Italy and Greece were “on an
intensive road of reforms. I am convinced that this will bear fruit.”
Greek politicians agreed this
week on an austerity package demanded by creditors but were negotiating
details. Inspectors from the troika are due in Athens next month for a review,
on which hinges a rescue loan installment of €31 billion.
“I want Greece to remain part of
the eurozone,” Merkel said. “I have at the same time indicated that credibility
is very important in the eurozone. Therefore we expect the program to be
implemented.”
Ahead of Merkel’s visit, German
officials told reporters Berlin wanted to reassure Beijing that European debt
is a “safe and good investment.”
Later, Wen and Merkel presided at
a signing ceremony for billions of dollars in business deals — a regular event
during visits by European leaders.
Airbus Industrie, a unit of the
French-German consortium EADS, committed to invest $1.6 billion in the second
phase of an aircraft final assembly plant opened in 2008 in Tianjin, Wen’s
hometown. A Chinese state company signed an agreement to purchase 50 Airbus
jetliners valued at $3.5 billion.
Volkswagen AG, Europe’s biggest
automaker, signed a deal to invest $219 million in an “environmentally friendly
production facility” and vocational training initiative, also in Tianjin.
Eurocopter, another EADS unit, signed an agreement to build a $12.5 million
production facility in China.
Officials of the two governments
also signed agreements to collaborate in biotechnology, electric vehicles,
agriculture, education, labor and the environment.
The next round in a regular
series of Chinese-German meetings was scheduled for next year, but German
officials say Wen asked Merkel to come early before the Communist Party begins
a once-a-decade handover of power to younger leaders in October.
Merkel met later Thursday with Xi
Jinping, who is due to become party leader and president.
The two-day visit comes as
Beijing is struggling to pull China out of its deepest economic slump since the
2008 global crisis. The government has cut interest rates twice and is pumping
money into the economy with a wave of investments by state companies.
A Cabinet official said Wednesday
that official measures are starting to take effect and growth was “stabilizing
at a slow pace.” But corporate profits are down and a survey of manufacturers
released last week showed future export orders have fallen.
Germany is China’s biggest
European trading partner and one of the few developed economies with which it
runs a trade deficit, due to large imports of German factory equipment and
industrial components. Beijing reported a $16.3 billion trade deficit with
Germany last year and $13 billion for the first seven months of this year.
Europe’s downturn has battered
China’s exporters, wiping out thousands of manufacturing jobs.
Exports to Italy in July plunged
26 percent from a year earlier, while those to even relatively strong Germany
were down 6.5 percent. Exports to France fell 8 percent.
The trade slump, coupled with
weak consumer demand in China, has raised the threat of unrest as the party
tries to enforce calm ahead of its leadership transition.
Merkel was accompanied by a
20-member delegation of executives from German companies in the auto,
chemicals, energy, commodities and other industries.
The visit also comes amid tension
over a request by European manufacturers of solar power equipment for
anti-dumping duties on Chinese products they say are improperly subsidized.
Chinese manufacturers that depend on the European market have warned Beijing
might retaliate.
The visit focuses mostly on
economic issues, but a senior German official told reporters he expects an
“open discussion” with Chinese leaders on Syria, which is in the throes of a
civil war that has left an estimated 20,000 people dead.
Russia and China have repeatedly
used their veto power in the U.N. Security Council to block strong Western- and
Arab-backed action against President Bashar Assad’s regime that could have led
to sanctions.
Germany hopes a Security Council
agreement on humanitarian issues could help provide a basis for a stronger
agreement on political questions, the official said, speaking on condition of
anonymity.
On Friday, Merkel and Wen planned
to travel to Tianjin, east of Beijing, to visit the Airbus plant.
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