Barry Naughton Comments on China's Image in Europe
China buys a better image in Europe - on sale!
01/07/2011
Nin-Hai Tseng,
CNN Money
As Europe's debt crisis unravels, leaders in the most troubled parts of the region have found an unlikely savior: China. Why its investments in Spain, Greece and Portugal are so smart.
Just as billionaire investor Warren Buffett swooped into the rescue when General Electric (GE) and Goldman Sachs (GS) found themselves battered during the height of the financial crisis, Greece, Portugal and Spain have found a vote of confidence from China at a time when talk of bailouts and debt defaults are unnerving international investors. It's quickly becoming the world's lender of last resort.
Earlier this week, China promised to back Spain by signing $7.3 billion in deals, which included investments in everything from energy to banking, as well as a $7.1 billion acquisition of certain assets of the Spanish oil firm Repsol. What's more, the country expressed confidence in the Spanish economy when Chinese Vice Premier Li Keqiang on Wednesday reiterated that Beijing would continue buying up debt from the euro zone's fourth-largest economy. China is already one of the biggest foreign owners of Spanish sovereign debt with about 10% of its total foreign holdings.
This follows China's pledge to back Greece and Portugal, although leaders have yet to confirm details of its bond purchases. Last summer, China struck more than a dozen major commercial contracts for business in Greece in what was its largest European investment to date.
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Barry Naughton is an authority on the Chinese economy, with an emphasis on issues relating to industry, trade, finance, and China's transition to a market economy. Recent research focuses on regional economic growth in the People's Republic of China and the relationship between foreign trade and investment and regional growth.
