Premier Wen Jiabao said on Wednesday China will continue to expand its investment in the eurozone and called on Western countries facing a crippling debt crisis to “put their houses in order”.
As Europe’s struggling economies look to cash-rich China as a possible rescuer, Wen also urged EU leaders to reciprocate by according the country full market economy status ahead of schedule.
Beijing has long demanded that the European Union and United States accord China full market economy status, a technical designation that would remove certain restrictions to Chinese exports and investments in Europe.
China has invested an increasing portion of its world-leading foreign exchange reserves in euro-denominated assets, and its leaders have repeatedly expressed confidence in the region’s economies during the debt upheaval.
“China will continue to expand investment in Europe,” Wen said as he delivered the opening speech at the summer session of the World Economic Forum.
However, he added that “European Union leaders and the leaders of its (Europe’s) main countries must also courageously look at China’s relationship from a strategic viewpoint.”
“Based on the WTO (World Trade Organisation) rules, China’s full market economy status will be recognised by 2016. If EU nations can demonstrate their sincerity several years earlier, it would reflect our friendship,” he said.
EU leaders have said in the past that the Asian giant has not yet met the necessary conditions, pointing out that most of China’s largest companies are state-owned and their leaders appointed by the government.
Wen also warned that the global economic recovery would be a “long” and “difficult” process, with unemployment in major economies high and emerging economies struggling to tackle inflation.
“Sovereign debt risks are growing in some countries, causing turbulence on the international financial market,” he added.
“All this shows that the world economic recovery will be a long-term, difficult and complicated process.”
Wen also urged action to halt the spread of the sovereign debt crisis that has sent global markets plummeting.
China is sitting on more than $3 trillion in foreign currency reserves and has already committed to investing in Greece, Spain and Portugal.
“Governments should fulfill their responsibilities and put their own house in order,” he said.
“The major developed economies should develop responsible and effective monetary policies, properly handle debt issues, ensure the safety the stable operation of investment in the market and maintain confidence of investors around the world.”
Wen’s speech in the Chinese port city of Dalian comes as global markets have been rocked this week by renewed fears that Greece, which was recently given the green light for a second bailout, will default on its debt obligations.
Portugal and Ireland have also received rescue packages while analysts have warned that Italy and Spain could follow suit, leading to warnings that the crisis could spread to other major economies.
Next week, China will discuss possible aid to the eurozone with leaders of the emerging economies of Brazil, Russia, India and South Africa, known as the BRICS, at a summit in Washington.
On Wednesday, China’s state Xinhua news agency reinforced the message to European leaders, urging the EU to “show its sincerity and goodwill in interacting with China” and “recognise China’s full market economy status”.
Wen’s speech kicked off the three-day summer session of the WEF, which was established five years ago and has this year attracted about 1,500 business leaders and government officials from 90 countries.
The Chinese premier also warned that his country’s growth would slow in the long term as it reached a “new stage of development”, and pledged to increase domestic consumer demand.
“China’s development is not yet balanced, coordinated and sustainable, there are many institutional constraints hindering scientific development,” he said.
“As the size of the Chinese economy grows, it will become difficult to keep high-speed growth over a long period of time.
“We have the right conditions and we have both the ability and confidence to maintain steady and fast growth of the economy and bring China’s economy to a new stage of development.”
Raw Story is a progressive news site that focuses on stories often ignored in the mainstream media. While giving coverage to the big stories of the day, we also bring our readers' attention to policy, politics, legal and human rights stories that get ignored in an infotainment culture driven solely by pageviews.
Founded in 2004, Raw Story reaches 5 million unique readers per month and serves more than 19 million pageviews.