Europeans never figured out how to get China seriously involved in its debt. Instead Europe’s crisis became China’s opportunity to buy assets.
The euro crisis divided Europeans among themselves and from external partners such as China – which was itself indirectly affected by the crisis as it depends on Europe as its largest export market. Member states such as Greece, Hungary and Spain sought commitments to buy their debt as expressions of trust in their economy, but the full extent of Chinese bond purchases remains unclear. On the other hand, Chinese acquisitions in these countries were tangible. When the European Council appealed to emerging economies to contribute to the EFSF, China, a risk-averse investor, only took a modest stake. Rather, it saw the euro crisis as an opportunity for investments and mergers and acquisitions. In particular, Lou Jiwei, the head of China’s sovereign wealth fund, is keen on boosting Chinese investment in infrastructure as China’s contribution to Europe’s future growth. Chen Deming, China’s minister of commerce, also sees an opportunity: “European countries are facing a debt crisis and hope to convert their assets to cash and would like foreign capital to acquire their enterprises.”
Both member states and the EU institutions have been too focused on solving the immediate crisis to develop a more long-term strategy for shaping China’s newfound involvement on the continent. As a result of both opacity on the Chinese side and the EU’s own lack of monitoring of European bond purchases, it is hard to know how present China really is in Europe’s debt. One positive development is the way the crisis seems to have forged closer links between the EU institutions and the Chinese national bankers, with direct videoconferences between Brussels and Beijing. This was exemplified by a public statement in July by ZhouXiaochuan, the governor of the Chinese Central Bank, which expressed a willingness to work closely with the EU, the ECB and the EFSF.