Europe Turns to China to Bolster Rescue Fund

With the ink drying on a potential agreement to stabilize the European financial markets, the head of the European bailout fund arrived in Beijing on Friday as EU leaders look for China to further tap its reserves in support of the rescue package. From Bloomberg: The European Financial Stability Facility may explore setting up a special purpose vehicle with the IMF, Klaus Regling, the EFSF’s chief executive officer, said at a briefing in Beijing today. Separately, Chinese Vice Finance Minister Zhu Guangyao said his government wants to hear about particulars such as the extent of loan guarantees to countries including Italy, and how the senior-debt portion would be structured. European leaders aim to tap China, holder of the world’s largest foreign-exchange reserves, for help after moving yesterday to contain the crisis by writing down Greek debt and targeting an expansion of the EFSF to about $1.4 trillion. China may seek to increase its influence at the IMF, a global lender of last resort, as a quid pro quo for contributing, said Tomo Kinoshita, an economist at Nomura Holdings Inc. … French President Nicolas Sarkozy spoke with Chinese counterpart Hu Jintao by phone yesterday and the two agreed to “cooperate closely” to ensure global growth and stability, Sarkozy’s office said in a statement. Regling said that he didn’t expect a “precise outcome” from talks with Chinese officials during his trip. While China has incentive to support its largest trade partner, The New Yorker’s Evan Osnos writes that it will need to satisfy a public which is questioning the logic of assisting the Europeans when problems persist back home: By Friday afternoon, China was edging toward a plan that could free up a hundred billion dollars, but it still faced one potentially enormous source of opposition: its own citizens. “The chief concern ...
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