What It Feels Like In China When Europe Comes Asking For Help

Feb 16, 2012
Originally published on February 21, 2012 7:08 am

Jiang Shixue is describing to me one of the most exciting moments of his life: The moment earlier this month when one of the most important people in Europe — German Chancellor Angela Merkel — came to visit his workplace.

"She said that the EU would be happy to see if China can offer a kind of helping hand," says Jiang, an academic at the Chinese Academy of Social Sciences.

Merkel never actually said the word "money," or "help." She said "cooperation" a lot. But Jiang says everyone in that auditorium heard one clear message: Europe needs help from China to get through its debt crisis.

"I can't believe that China is now the country that the EU is trying to seek help from," Jiang says. "Twenty-two years ago China was a basket case — a very poor developing country. So I really feel quite proud."

Europe buys a lot of stuff from China. So, Jiang says, it makes sense for China to help Europe. But this idea is hard to sell to Chinese people. No surprise, given that the average Chinese person makes one sixth as much as the average Greek person.

"If you talk to the laymen on the streets they will tell you, Give the money to us, instead of the foreigners,' " says Yu Liang, a civil servant in Beijing.

But the idea that China — a poor country — should be financing the governments of rich countries really isn't so strange. After all, China is one of the world's biggest investors in U.S. Treasury bonds.

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RENEE MONTAGNE, HOST:

We're going to hear now from Planet Money. And we start with a reminder of the root of Europe's financial crisis: European countries borrowed too much money. That money has to be paid back, but in many cases, new money does not exist in Europe. Chana Joffe-Walt with our Planet Money team reports that this simple fact has European leaders on a global search for cash.

CHANA JOFFE-WALT, BYLINE: Here's where we are: The Europeans have tried bailout funds. They've hosted dozens of summits, at those summits hatched plans for more bailout funds. The European Central Bank has gotten involved. And yet investors are still afraid to lend money to European countries. The countries need money, and so it has come to this.

JIANG SHIXUE: Chancellor Merkel came to our academy talking to our scholars.

JOFFE-WALT: This is Jiang Shixue. He's an academic at the Chinese Academy of Social Sciences, gleefully describing to me one of the most exciting moments of his 56 years as a Chinese person: The moment when one of the most important people in Europe, German Chancellor Angela Merkel, came to his country, to his workplace.

SHIXUE: She said that the E.U. would be happy to see if China can offer a kind of helping hand for the E.U.

JOFFE-WALT: She said she would like to see China offer a helping hand to the E.U.?

SHIXUE: Yeah, yeah, yeah. Yeah, yeah, yeah. And finally, she...

JOFFE-WALT: Meaning what? Meaning money?

SHIXUE: Oh, yes. Yes. Of course, money. Well, I would say her voice was gentle and that her words were nice and open.

JOFFE-WALT: Well, you have to be friendly and gentle when you're asking somebody for money.

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SHIXUE: Yes.

JOFFE-WALT: Merkel never actually said the word money or help. Cooperation, that's a word she used a lot. But no matter, Jiang says everyone in that auditorium heard one clear message: Europe needs help from us.

SHIXUE: I can't believe that China is now the country that the E.U. is trying to seek help from.

JOFFE-WALT: That the E.U. is seeking help from?

SHIXUE: Yeah. Yeah. Yes. Yeah. Yeah. Twenty-two years ago, China was like really a basket case, a very poor developing country. And so, I really feel quite proud.

JOFFE-WALT: Were you convinced by Chancellor Merkel?

SHIXUE: Yes, I would say. Yes. Yeah. Yes, why not?

JOFFE-WALT: Jiang says it makes sense for China to help Europe. Europe buys a lot of stuff from China. China needs a healthy Europe. And the Chinese government has expressed interest in increasing its investment in Europe. But it wants to make sure its money is as safe as possible. And that, right now, is a little complicated to pull off. Not to mention that it's a hard to sell to the people of China. The average Chinese person compared to the average European citizen is dirt poor, makes on average about a sixth of what a Greek person makes in a year.

Here's Yu Liang, a government civil servant in Beijing.

YU LIANG: Yeah. If you talk to the laymen on the streets, they will tell you that give the money to us instead of the foreigners.

ARVIND SUBRAMANIAN: Well, I mean, in some ways, it's actually less bizarre than you think.

JOFFE-WALT: This is Arvind Subramanian at the Peterson Institute for International Economics in Washington.

SUBRAMANIAN: The principle that a poorer country, like China, should be financing rich country governments, I mean, that's been happening for a very, very long time now. Remember, who is one of the biggest investors in U.S. Treasury bonds? It's China, right?

JOFFE-WALT: Subramanian says, you can think of this as an extension of an already bizarre trend - rich countries are relying on poor countries to finance the regular times, and now, to get them through emergencies too.

Chana Joffe-Walt, NPR News.

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