In a stark sign of the times, Europe the head of the European Financial Stability Facility flew to Beijing this week, asking the Chinese, who have $3.2 trillion in foreign reserves, to invest in Europe’s recovery. The New York Times, a reliable China-basher, is beside itself reporting:
That Europe would turn so openly to China to help stabilize the debt crisis shows how quickly the Chinese economic juggernaut has risen on the world stage. Indeed, if China comes to Europe’s aid, it will signal a new international order, with China beginning to rival the role long played by the United States as the world’s pivotal financial power.
But the Chinese aren’t so quick to bite:
A senior Chinese official, Vice Finance Minister Zhu Guangyao, said China — like the rest of the world — was still waiting for the Europeans to deliver crucial details on how the rescue fund, the European Financial Stability Facility, would operate and be profitable before deciding on whether to participate.
The Chinese are also worried about domestic reaction to the government investing so much in the West instead of at home.
Now, Chinese-owned companies run the biggest shipping port in Greece. They own highways and other crucial infrastructure, and are working to snap up other strategic businesses to anchor their presence on European soil.
Chinese citizens have also been venting anger on the Internet about government investments in Europe that have turned out to be anything but profitable, including billions of euros worth of volatile bond holdings from stricken countries like Spain and Greece.
Although China says it is opposed to mixing political issues with investment decisions, it has wanted Europe to recognize it as market economy, and has steadfastly refused to address US demands to raise the level of its currency.
Is the World Collapsing?
Changes in the world order are accelerating at a dizzying rate ever since the US invaded Iraq and lost credibility as the ‘can-do’ country. Now, in the wake of the Western financial crisis, it is losing its place as the ‘go-to’ economic power.
But these are not bad things. The economies of many other countries, particularly in Asia, have exponentially expanded in the last 30 years and that’s increased the world’s economic breadth. The more other countries ‘catch up’ to the US, the larger the world’s economy and greater the world market for US goods and services. England, France and Germany survived the ascendence of US power after WW2 and they’d been destroyed by the war.
The US, never so unfortunate as to experience a major foreign war on its own soil, nor the destruction such war brings, will survive the ‘rise of China’. It is in the economic interest of every nation in the world to see other nations prosper as well. Access to markets and control of land – gained through claims, occupation, invasion, royal marriages, colonialism, etc. – are the fundamental reasons for war. International organizations, not war, are the forum for handling these disputes.
If China can help save Western capitalism, why not?