Europe is China’s largest trading partner, with trade worth around $740 billion flowing between the two in 2011. Last week the IMF warned that an escalation of the EU debt crisis could halve China’s growth rates.
Lagarde said the global economy faced a “defining moment,” and called on euro zone governments to consider financial risk-sharing steps like common euro zone bonds as a way to tackle the 17-member currency bloc’s sovereign debt crisis.
UK Finance Minister George Osborne has reached agreement on technical measures with Norman Chan, CEO of the Hong Kong Monetary Authority, in order to help London play an important role in boosting the yuan as a major global currency.
The Commerce Department’s report suggested a modest improvement in the politically sensitive trade deficit with China however, with rising US exports (up to $9.9 billion) and falling imports narrowing the imbalance to $26.9 billion in November – the highest since December 2010.
The beleaguered currency fell to $1.2831 against the dollar after rising French borrowing costs and a suggestion from Spain’s new economy minister that Spanish banks may face up to €50 billion in new bad loan provisions unsettled markets.