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Why China should assist Europe with financial recovery

November 7th, 2011 Leave a comment Go to comments

An opinion from a foreign trading company in China

We live in a small world these days. World markets rely on each other and what affects one country will invariably affect another. We have become so intertwined with who owes what to whom, and whose debt is held by whom to the point that the current looming European financial crisis has further unveiled the intricacy and co-dependency between Europe and China.

Europe is China’s largest trading partner. Europe has provided two decades of foreign investment, year-on-year solid bilateral trade and decades of technology exchange that has benefitted China’s rapid development. China has in turn provided Europe with the workforce and large scale production that has allowed businesses on both sides to grow and profit.

The present financial situation is almost entirely Europe’s fault, caused by poor fund management and reliance on a single young currency while member nations ignore policy and allow overspending. The mistakes made should be admitted and stricter rules enforced if they are to expect any further confidence in them and the Eurozone. Anyone considering aiding Europe needs to seek genuine assurances of change to the status quo before any assistance is to be offered.

If Europe suffers deeper financial crisis, then demand for products and materials will decrease. This will directly affect factories in China and Europe and cause a major decline in national exports, especially in China. As is always the case, it is the ordinary, hard working people of China and Europe that will be most affected by this fallout.

Based on the past 100 years of strong relations and support China and Europe has shared, I feel that China should support and help with the financial recovery in Europe. It is in their interest to do so. I wouldn’t want or expect China to solve the issue and bail everyone out, but it is in their interest to look at a way of at least maintaining trade levels so their manufacturing industry – on which they still rely heavily – is not critically affected. The domestic market in China is strong and still developing but it still has a very long way to go before it matures to a reliable level.

The prevailing attitude in the Chinese state-owned media appears to be that the request for help from Europe is ‘a trap’ and an ‘attempt to squander China’s hard earned wealth and reserves’. This is clearly not the case, as Europe looking to sabotage its biggest trading partner in order to get out of financial trouble themselves is, quite frankly, ludicrous. Or is it?

I can understand the calls for caution at this time however. We are all aware China has a lot of work to do domestically, maintaining a high level of growth and development. China therefore needs a great deal of money to progress in many areas. This will be made even harder due to the fallout of a deepening European financial crisis.

Politicians on both sides will express fears and raise issues, but at the end of the day if a crisis escalates and deepens the only way out is business. Business generates capital, employment and work. Now more than ever, our focus should be on working towards fresh business, renewed trade and developing solutions to support the changing world we live in.

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