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Will China Step In To Aid Europe?
Originally published on Sun November 6, 2011 4:58 pm
AUDIE CORNISH, host: There's one country on which the European Union has been pinning its hopes: China. Twice in the last two weeks, European leaders have asked China for major financial help.
NPR Shanghai correspondent Frank Langfitt has been tracking China's reaction and joins us now. Good morning, Frank.
FRANK LANGFITT: Good morning, Audie.
CORNISH: So what role could China play in beefing up the EU's bailout fund?
LANGFITT: Well, I think the EU is looking for as much money, at this point, that they can get out of China. And the reason they are going to China is China has more foreign currency reserves than anybody else, primarily because of the enormous exports that they put out there. That's $3.2 trillion they have. And they're looking for whatever they can get, you know, in terms of the EU.
Now, China has been really careful. They haven't given any numbers; they've made no commitments; and they've really kind of downplayed expectations. And one reason is, there so much uncertainty around the EU right now. As you remember, just a few days ago, the prime minister there in Greece was talking about a national referendum on the debt plan, which rattled everybody. And the Chinese have also made it very clear that if they're going to do anything, they want some kind of insurance against big losses.
They've already been criticized in the past for putting so much money into U.S. treasuries, and they don't want more of that kind of backlash here, back home in China.
CORNISH: Frank, how does the Chinese public feel about this?
LANGFITT: Well, you know, it hasn't been a big topic of conversation - I think - generally, on the streets. But if you go on the Internet, you go to Chinese Twitter - which is called Weibo - it's been pretty negative.
China is the second largest economy right now in the world. It's a huge country, though, with 1.3 billion people. So the per capita income is really a small fraction of what you'd see in most Western European countries. So a lot of the comments have been running along class lines. And I just want to I read one to you here.
It goes, quote: The Chinese have no retirement money, cannot afford to see a doctor, can't afford to do buy apartments. What about Europe? People don't go to work; they enjoy a good life. Poor people lend money to rich guys? This is just absurd.
CORNISH: So how are the country's leaders handling that level of criticism?
LANGFITT: You know, right now they're being very careful to sort of say, we're not going to do a whole lot here. We're going to be very, very careful; that Europe really has to get its house in order. They've been very critical of the EU. But the government here does pay attention. Even though it is a dictatorship, they do pay attention to public opinion.
They poll frequently. There are a lot of public protests in this country. And that comment that I just read to you kind of gets to a disconnect between sort of how the world sees China these days, compared how ordinary Chinese people see themselves. You know, from the outside this is an amazing economy. It's still going at 9.4 percent, even though it's slowing down. And if you look at my neighborhood, you will see BMWs and Bentleys on the street.
But if you look on the side of the streets, you'll see these little shops, where people really feel like they're struggling. They're dealing with 6 percent inflation. They'll often work until 9, 10, 11 at night - selling fruit and cooking food. They have to sleep in their stores. So the idea of extending money to the EU is just not that appealing.
CORNISH: If China does provide help to the EU, I can't imagine that's going to be a no-strings-attached proposition.
LANGFITT: No, not at all. In fact, I think in some ways, the Chinese leadership may see this as a really great opportunity to sort of show their power and influence globally. No one has ever really come to them quite like this before.
One of the things they've made it very clear that they want is to be designated a full-market economy by the EU. And that sounds kind of esoteric, but it is important. This would make it harder for European firms to bring trade cases against Chinese companies. That would be good for Chinese companies in terms of exporting, but would probably put some European firms at something of a disadvantage.
Generally, people expect that China will do something here. The EU is its largest export market, so it has a self-interest in helping. But right now, it's kind of enjoying positive press. There've been a lot of stories that have sort of been framed as, can China save the EU? And China has repeatedly said no, especially for public consumption. But the question only enhances the perception of power of the country here. And I think probably from the government's perspective, that's a really good thing.
CORNISH: NPR Shanghai correspondent Frank Langfitt. Frank, thanks so much.
LANGFITT: Happy to do it, Audie. Transcript provided by NPR, Copyright NPR.