China Worried About Euro

The Western governments has tradition of asking China for reforms. But lately the requests go in the opposite direction: the deeper the U.S. and Europe sink into economic problems, the louder and more confident Beijing warns that it is time for fundamental change.

After the U.S. debt crisis, the Chinese commentators have been busy for weeks, now they are turning to the euro. “The euro-zone must take concrete steps to restore market confidence in the euro zone and the euro”, the People’s Daily, the official organ of the Communist Party demanded on Monday. The long-time high budget deficits in many countries in Europe and insufficient market regulation had led to a global destabilization of the markets, criticized the authors, the political scientist Zhang Zhixiang (张之骧) of the Beijing People’s University and the economist Zhang Chao (张超) of the China State Development Bank. The euro-zone countries must “reform its regulations, which stifle economic development”. Europe must act “responsibly” towards the world economy.

Similarly, the Xinhua news agency commented the talks between Chancellor Merkel and President Sarkozy. “The euro zone meeting brings more hope than concrete action,” headlined the national press. Also, the Global Times mocked by caricature: Merkel and Sarkozy, sitting as a failed love couple on a cafe table at the foot of the Eiffel Tower, one dog covered with the European flag is growling nearby. The caption: “No time for romance.”

In the context of the state media, it’s not just about the thing itself of the Beijing government’s concern of Europe and offer to European in highlighting their own achievements and to divert attention from domestic problems. Moreover, from the Chinese perspective, the West loses its economic dominance and its claim on the better political system.

As a major customer of western government bonds, China considers that it has the right to give advice. “The U.S. must keep its promises to China,” said Xinhua in an opinion article. U.S. bond purchases by China had “demonstrated China’s willingness to meet its responsibilities as the second-largest economy in the world, and has shown that actions speak louder than words,” it says. If U.S. do not take serious measures to bring its own house in order, “it would undermine the global recovery.”

The next will probably turn to France’s President Nicolas Sarkozy: He will meet China’s President Hu Jintao on Thursday.