The EU Summit could be said to have been successful as it helped lift the euro and stock markets but this is not the end of the story. Europe cannot make it alone, despite all the “plans” agreed on last night to help contain the sovereign debt crisis through bank recapitalization and expanding the EFSF. The EU requires the IMF to play an important role and also needs China to contribute in efforts to resolve the region’s debt crisis.
French President Nicolas Sarkozy is scheduled to have a conference call with Chinese counterpart Hu Jintao today to discuss China’s role in contributing to the crisis plan to solve the sovereign debt crisis and increase its involvement in the EFSF.
The phone call comes a day before a planned visit to Beijing by the chief executive officer of the EFSF, Klaus Regling, who intends to persuade Chinese investors to contribute to Europe’s efforts China has the world’s largest foreign currency reserves at more than $3.2 trillion and is a major trading partner to the European Union.
China exports alot of goods every year to Europe, so it also in China’s interest to help the region’s economic recovery.
Meanwhile, Chinese Premier Wen Jiabao has signalled China’s willingness to help the European Union from financial turmoil. The expansion of the EFSF rescue fund and a deal for bondholders to take 50 percent losses on Greek debt may help French President Sarkozy and German Chancellor Angela Merkel to convince China that Europe is getting to grips with the crisis and persuade the world’s second largest economy to help out.