China will help Europe if it is recognised as a ‘market economy’

In China’s fight against the United States as an alleged currency manipulator, it is now trying to draw in the embattled euro zone. Agence France Press says that the Chinese are willing to contribute to the leveraged EFSF now set to be proposed by the EU at today’s summit. But only if they receive the EU’s blessing as a market economy.

Here’s how the Portuguese site Dinheiro Vivo puts it (my translation):

Agence France Press reports that "China is in favor" of contributing to the [European Financial Stability Facility], specifically in its form as an autonomous investment (special purpose vehicle). However, the European Union will establish identical negotiations with Brazil, Russia and South Africa. On Friday, Klaus Regling, Head of the EFSF will visit China.

But the Chinese aid is not free. German diplomatic sources said, the Asian giant will come to the aid of Europe in exchange for a quick recognition as a "market economy", which should happen next year. This recognition would mean a considerable improvement of China’s reputation and reduce difficulties for Chinese trade policy, which would force the Euro countries to be more competitive.

I also understand that the Norwegian sovereign wealth fund is involved in negotiations to leverage up the EFSF. And I expect sovereign wealth funds in the Middle East and Asia to be asked for their participation as well.

Source: China está preparada para ajudar o Euro – Dinheiro Vivo

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