Wednesday, February 15, 2012
Q&A: Will China come to the EU's rescue?
It's becoming a familiar scenario in the wake of the eurozone crisis. Indebted nations have made repeated entreaties to Chinese leaders for bail out help in the form of buying government debt bonds or direct investment. And, indeed, Beijing has pledged to help, and Chinese investment in European companies has skyrocketed.
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4 comments:
This article is common sense, China has invested interest in a economically stable U.S. and EU. The real question is when is China going to stop investing in countries that have a large amount of debt? Furthermore, the article stated that China will not make investments with no rate of return. So what is their criteria for investment?
The huge amount of investments towards foreign countries actually have been criticized by Chinese citizens. People think that lending money out when the country itself is still in need is stupid.
I agree that China investing EU is just a question about when, not about whether or not.
China seems to be investing in numerous places in the world - including the African Union, an uncommon occurrence for today's world. On one hand, this is clever because it gives more economic alliances to the state. And this has the potential to prove quite beneficial in the long term market. However, while investing in the AU is depending on economic growth, investing in the EU seems to be based more on its past economic viability. It should be interesting to see how the political and economic aspects of this play out over time.
The issue whether China will/should invest in EU is complex. It is not just about return rate of money, but it also about relationships with foreign countries and therefore it also about future plans/cooperation with other countries. As each coin has two sides, this might not be the best time to invest in EU, as the debt problem is serious now. On the other hand, it might be a potential opportunity to gain profits from investing in EU’s corporations as they are working harder to extricate them from the economic depression. That is, once financed enough money, there is a good chance for corporations who (once) had a good quality to recover from the crisis and generate high profits. To conclude, investing in EU should be a prudential decision; yet, it is not to say it the worst time to invest in EU.
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