Good news: China might bail out Europe

They already own the U.S. Why not complete the whole set?

China has said it is willing to bail out debt-ridden countries in the euro zone using its $2.7trillion overseas investment fund.

In a fresh humiliation for Europe, Foreign Ministry spokesman Jiang Yu said it was one of the most important areas for China’s foreign exchange investments.

The country has already approached struggling European countries with financial aid, including offering to buy Greece’s debt in October and promising to buy $4billion of Portuguese government debt…

[E]xperts believed still be some years before America’s leadership role is really challenged – largely because Beijing has given no indication it is ready to take on the responsibility of shepherding the world’ economy.

This foray into the future of the euro could be a signal from Beijing that it is ready to change that perception.

Ace is bullish on this idea on the theory that the more money China spreads around the world, the greater their incentive is to preserve global stability. Makes sense, but how to square that logic with the situation in Korea? The past few weeks prove that the Chinese are willing to tolerate instability even at the risk of regional war and economic catastrophe to hold rivals like South Korea and Japan in check. Is the Eurozone bailout really just China’s way of developing its economic interests in Europe at a moment of maximum leverage? Or is there a grander strategic ambition here of neutralizing Europe in future disputes between the U.S. and China? Doves will dismiss that as neocon paranoia about enemy expansionism (just as they dismiss virtually any potential long-term strategic threat), but Beijing’s not building aircraft carriers for nothing. What sort of strings, precisely, will be attached to this money? Because, depending upon how easy they are to pull, the Chinese might come away feeling less cautious about making provocative moves, not more.

Exit question: Is China really in a position to be guarantor of western financial stability? Hmmmmmm.

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