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China mulls contribution to Europe’s rescue fund

German Chancellor Angela Merkel and Chinese Premier Wen Jiabao discuss euro crisis in Beijing.

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Germany's Chancellor Angela Merkel gives a speech at the Chinese Academy of Social Sciences in Beijing on Feb. 2, 2012. (Ed Jones/AFP/Getty Images)

BERLIN, Germany — Angela Merkel is on her fifth visit to China in seven years. During her current, three-day trip, she appears to be as much an unofficial ambassador for the troubled European Union as visiting German chancellor.

As her visit kicked off on Thursday, Merkel sought to ease Beijing’s concerns about the euro zone debt crisis, while also promoting the strong business ties between Germany and China.

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And while Premier Wen Jiabao made no firm financial commitments, he did say that China would study how it might lend further support via the bloc’s bailout funds, the European Stability Mechanism (ESM) which in July will replace the temporary European Financial Stability Facility (EFSF).

“China is considering greater involvement in resolving Europe’s debt crisis by participating in the EFSF and the ESM,” he said.

China has been regarded as a potential source for the funding of the 500 billion euros ($650 billion) ESM. It is estimated that a quarter of its $3.18 trillion in foreign exchange reserves are in euro assets, and it's in Beijing's interest to see Europe, its biggest market, solve its sovereign debt crisis.

On Thursday Wen admitted that solving the crisis was “urgent,” adding: “Whether we can maintain the stability of the financial system and stable economic growth and facilitate integration not only concerns the future of Europe but also has a great impact on China.”

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Before meeting with the premier, Merkel had addressed the Chinese Academy of Social Sciences (CASS) think tank. In the speech, she asserted that Monday’s agreement by 25 member states to a fiscal pact designed to curb overspending had put the EU “on the right track” to financial recovery. “The European Union — in particular those states that have adopted the euro — has made considerable progress in the last two years,” she said.

She added that: “This is not a crisis of the euro, it is a debt crisis and a crisis of different levels of competitiveness.”

Merkel, who is well respected in China, despite having received the Dalai Lama in 2006, is also intent on promoting the strong trade and business links between the two countries during her visit.

China’s imports from Germany rose 24.9 percent last year to $92.7 billion and many major German companies, such as Volkswagen and Siemens, do business there.

The chancellor is accompanied by a large business delegation and is to visit a number of the 500 German companies based in the southern province of Guangdong on Friday. On Thursday she said German firms operating in China wanted to be treated on an equal footing to Chinese firms.

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http://www.globalpost.com/dispatch/news/regions/europe/germany/120202/china-merkel-contribution-europe-rescue-fund