Europe seeks succour from China as financial market crisis worsens
24 Oct 2008
Mumbai: Representatives from 43 countries have converged at the Chinese capital Beijing for an Asia Europe Meeting (Asem) to discuss ways to address the imbalances in the global financial system that led to a global slowdown.
The summit that brings together the 23-member European Union and 19 memeber states including the G7 that comprise the G20, opened with a call to China to do more to tackle the ''unprecedented'' challenges posed by the global financial crisis.
China is important because it is a true ''island of stability" amid the raging financial crisis. The stability owes much to the huge reserves China holds, assessed at around $1.9 trillion, larger than Canada's gross domestic product. It is also the second largest trading nation after the United States.
While China can maintain its own stability, it is also capable of helping developed countries overcome the crisis.
The European nations want China to change the currency rules that tilt the balance of trade in favour of China and accede to a new global financial order as the West sets out to create a new financial superstructure.
China, India and Japan need ''to be on board'' as the world tries to avert a global recession. ''We swim together or we sink together," European Commission President Jose Barroso said, calling for tighter Asia-Europe co-operation in order to survive the crisis.
''I very much hope that China can make an important contribution to the solution to the financial crisis. It's a great opportunity for China to show a sense of responsibility," he added.
"No one in Europe or Asia can seriously pretend to be immune. We are living in unprecedented times, and we need unprecedented levels of global co-ordination."
Nicolas Sarkozy, the French president, who currently holds the rotating European Union (EU) presidency, said he will seek Asian backing for his bid to radically restructure the Western-dominated global financial system.
European leaders and the smaller Asian nations are pressing China to support new financial rules that include everything from a currency convertibility to a bank rescue plan.
European Union has coordinated a over $2 trillion plan to rescue banks and money markets hit by the credit market meltdown and bring back investor confidence. But action on the Asian front has been limited to individual governments intervening in the market by cutting interest rates, guaranteeing bank deposits and injecting liquidity into the markets.
On Thursday, Chinese president Hu Jintao said the world economy looked ''grim and complicated".
The financial crisis in the West has left emerging markets and developing countries with weak foreign demand and mounting inflation, he noted.
There is a need to ''explore the possibilities for reform of the international financial structure,'' said Liu Jianchao, a Chinese foreign ministry spokesman, but he gave no specifics on ways to stabilise markets.
Meanwhile, China's economy, too, has begun to slow down since the last month, with the third quarter growth slowing to 9.9 per cent, down from 11.9 per cent for the whole of 2007. The decline may accelerate as the global financial crisis spreads.
