HONG KONG — Prime Minister Wen Jiabao said Thursday that China was considering whether to work with the International Monetary Fund to play a greater role in financing Europe’s efforts to end a sovereign debt crisis, but he left it unclear whether China was willing to drop conditions that would make its help unappealing for European countries.
Mr. Wen, speaking at a press conference in Beijing after a meeting with Chancellor Angela Merkel of Germany on the first day of her three-day visit to China, said that officials were studying whether China should be “involving itself more” in Europe’s debt troubles through investments in the European Financial Stability Facility and the European Stability Mechanism. This could be done through the I.M.F., he said.
One idea under consideration by China in recent months is whether it could lend money to the I.M.F., which would then lend it to Europe. This would transfer the risk of a European default to the I.M.F.
Russia embraced this approach in December, but was willing to lend only $20 billion. China had $3.18 trillion in foreign exchange reserves at the end of December, dwarfing the reserves of every other country and potentially giving it the financial power to make a much bigger contribution.
Mrs. Merkel is the first of several European leaders scheduled to visit China this month, the latest in a series of signs that China’s huge foreign exchange reserves have begun to give it financial influence to rival Washington’s.
Full article: China Considers Offering Aid in Europe’s Debt Crisis (New York Times)