A Surprise Boost
for Euro from China
By
F. William Engdahl 4 October 2010
The embattled Euro has gotten a surprise boost from an unexpected
quarter―China. The country with the world’s largest foreign
exchange currency reserves, China, has pledged to support Greek
debt as well as the Euro in what is clearly a geopolitical
decision. In doing so, China has signaled it seeks to prevent the
US financial warfare attack on Europe and to play the EU off
against the USA in a geopolitical chess game of a fascinating
dimension.
Chinese Prime Minister, Wen Jiabao, on an unusual visit to
tiny Greece, a country which normally would never warrant such a
high-level visit from the world’s fastest growing economic giant,
has pledged support for Greece and for the Euro. According to the
official Chinese Xinhua News Agency (and China
Daily), “China supports Greece in firmly carrying out
structural reforms and cutting its fiscal deficits to improve
competitiveness. China welcomes the EU and the IMF's rescue package
for Greece and stands ready to help Greece out of recession.”
What it means concretely was made clear by Wen Jiabao at a
press conference in Athens when he stated, “‘China is holding Greek
bonds and will keep buying bonds that Greece issues.
We will undertake
to support eurozone countries and Greece to overcome the
crisis.” The last statement is far the most
significant. It indicates that China has made a strategic decision
to counter any future attempt by US-based hedge funds and banks to
attack the weak countries of the Eurozone, including Ireland,
Spain, Portugal or Greece. Early this year, as we noted at the
time, Wall Street banks such as Goldman Sachs, working in tandem
with the US-based credit rating agencies, Standard & Poors and
Moodys and Fitch, exploded the Greece financial crisis at the
precise time China and other major investors were beginning to have
serious doubts about the fiscal stability of the United States and
of the dollar.
Let me be clear. The Euro as it stands, the supranational
European Central Bank and the EU approach to international
financial stability is not merely a flawed construct. It is
inherently programmed to crises. It was born as the product of
flawed rotten political compromises in te 1990’s through the Treaty
of Maastricht as an attempt by France and Italy and Britain to
control an emerging German economic colossus after German
unification.
However, the concerted attack by a group of New York hedge
funds such as George Soros’ and Paulson’s earlier this year and the
precisely timed credit downgrade of Greece to “junk” status
were part of a concerted US strategy of financial warfare against
that Eurozone, the only potential alternative to the dollar as
world reserve currency. Should the US dollar lose its status as the
world leading reserve currency―today it still counts for some 65%
of central bank currency reserves―the United States would be
ultimately doomed as world sole Superpower.
Now the
surprise announcement by China of plans to support Greece and the
euro give an unexpected boost to the embattled country and to the
euro and expose the dollar even more to possible
selloff.
Greece desperately needs foreign investment to help it
meet terms of a €110 billion bailout from eurozone members and the
international monetary Fund that saved it this spring from state
debt default.”I am convinced that with my visit to Greece our
bilateral relations and cooperation in all spheres will be further
developed,” Wen said on his way to Brussels for an EU-China
Summit.
Like most things that China does these days, it is part of
a shrewd political calculation. Greece has agreed to support EU
recognition of full market economy status for China within the EU,
while China agrees to back Greece’s call for UN mediation over
Cyprus. The two countries will cooperate on development as well of
Piraeus Pier, upgrading it to a distributing and transfer center
for Asian exports to Europe, the Mediterranean, and the Black
Sea.
http://www.engdahl.oilgeopolitics.net/Geopolitics___Eurasia/China_Euro_pe_/china_euro_pe_.html
China’s cash for geopolitics
In Mao’s China, power flowed from the barrel of a gun: Beijing
used war more often than anything else to advance geopolitical
ends. But China doesn’t need a gun as often today. Over the
weekend, when Premier Wen Jiabao promised to use his foreign
exchange reserves to shore up Greece’s flailing economy, the world
was reminded that geopolitical power now flows from Beijing’s
cash.
With investors again sceptical about Europe’s public finances,
China is
conspicuously riding to the rescue. On Saturday,
Wen offered to buy more Greek government bonds; on Sunday, he
talked up the euro, a currency that’s been recently criticized.
China deserves
points here for a forward-looking strategy. First,
it gets to shop around for new investments and new partners,
especially now that its old ones—the US—are prompting some
rethinking. Second, it has now effectively set up a beachhead at
the peripheries of the euro zone, from where it can make inroads
into Europe.
And this continent is an important target. Wen himself has
expressed hope that the European Union will from now on look
favourably at Chinese trade. This surely means relaxing
restrictions on Chinese imports into this vast market. It could
even mean not attacking an undervalued yuan: The Financial
Times has reported that China has been in secret currency
talks with France. Europe is, after all, still a useful card in
global forums: If the US isn’t going to support China at the Group
of Twenty or the International Monetary Fund—Washington is intent
on blaming Beijing’s trade policies these days—perhaps Europe can
be enticed to do so.
This kind of diplomacy has already earned China African support.
Worries about neocolonialism were shoved aside in August when South
Africa’s trade minister emphatically embraced China’s investments.
It takes no stretch of imagination to assume that this could be
Greece’s trade minister in some years’ time: Wen announced $5
billion for Greece’s shipping industry, so that it can buy Chinese
material.
By cleverly deploying its savings surplus, China’s Communist
Party has in a mere decade managed to amass serious geopolitical
clout, and it’s hardly even fired a bullet. Still, when the balance
of power shifts so strongly—no matter how it does—the rest of the
world has to sit up and take note. It will be in India’s interests
to lead the comity of nations in crafting a strategy in
response.
http://www.livemint.com/2010/10/04224027/China8217s-cash-for-geopoli.html?h=B
Chinese
premier calls for advancing Asia-Europe co-op
Chinese Premier Wen Jiabao who arrived in Brussels, Belgium on
Monday delivered a speech at the opening ceremony of the eighth
Asia-Europe Meeting (ASEM) Summit, calling for advancing
Asia-Europe cooperation from a strategic and long-term
perspective.
Chinese Premier Wen Jiabao (C) speaks at the opening ceremony of
the eighth Asia-Europe Meeting (ASEM) in Brussels, Belgium, Oct. 4,
2010. Wen Jiabao delivered a speech at the opening ceremony.
(Xinhua/Pang Xinglei)
He said "with the joining of Australia, New Zealand and Russia,
ASEM partners have formed a close-knit community of interests,
covering the entire Eurasian continent from east to west."
Premier Wen made a five-point proposal in which he said the ASEM
partners must work together to promote world economic growth.
"We should intensify macroeconomic policy coordination, manage
with caution the timing and pace of an exit strategy from economic
stimulus, and keep the exchange rates of major reserve currencies
relatively stable," he said.
ASEM partners
must work together to reform the international economic and
financial systems, the premier noted.
"Global economic governance reform is of fundamental importance
in overcoming the financial crisis and we must explore ways to
establish a more effective global economic governance system," he
said.
http://english.peopledaily.com.cn/90001/90776/90883/7157644.html