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China likes debt deal, warns it's not EU's Good Samaritan

A financial newspaper is fixed to a pillar by a newspaper seller with The Bank of England building behind, in the city of London, Thursday, Oct. 27, 2011.

Kirsty Wigglesworth/AP

China has welcomed a hard-won deal to try and beat back Europe's debt crisis, and indicated Thursday that it may be willing to bolster a newly created fund to help the continent's wobbliest economies.

However, Beijing warned at the same time that it "should not be seen as the EU's Good Samaritans" – suggesting resentment at being asked to ride to the rescue of more developed economies than its own.

One of the key components of the deal hammered out overnight in Brussels is a plan to reinforce an existing €440-billion bailout fund, known as the European Financial Stability Facility, or EFSF. The fund has already been drawn upon to help prevent defaults in Greece, Portugal and Ireland, leaving around €290-billion remaining as worries mount about debt problems in Italy, Spain and elsewhere.

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Under Thursday's agreement, the value fund is expected to increase to as much as €1-trillion, French President Nicholas Sarkozy told reporters, after European leaders agreed to leverage existing guarantees by as much as five times.

Mr. Sarkozy is scheduled to speak by telephone with Chinese President Hu Jintao on Thursday.

The state-run China Daily newspaper reported this week that European officials have approached Beijing about contributing to the EFSF, and Klaus Regling, the fund's chief executive, will be in Beijing on Friday to meet with Chinese leaders. Mr. Regling will also visit Tokyo on his trip.

"We support the European Union's series of positive efforts to tackle the current financial crisis. We are also ready to work with the European Union to overcome the difficulty," Chinese Foreign Ministry spokeswoman Jiang Yu told a regular press conference in Beijing on Thursday.

Ms. Jiang refused to say what kind of help China was willing to offer, or what conditions it might set. It's believed that China, Brazil and other developing countries have indicated they are willing to boost the EFSF, provided the money is routed via the International Monetary Fund. Such a move that would give the countries a greater say at future IMF meetings, something China has long sought.

An editorial distributed over the official Xinhua newswire suggested there would be limits to how much help the EU could expect from China, which has the world's largest foreign currency reserves at more than $3-trillion.

"While China and other emerging economies indicated they won't be bystanders of the euro zone crisis, it would be unfair to ask them to shoulder the same responsibility as those directly responsible for the crisis. Emerging economies should not be seen as the EU's Good Samaritans – in the end, the EU has to pull itself out of the crisis," the editorial read.

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A further hint of how the euro zone rescue plan is viewed inside China was provided by an editorial cartoon that ran in the China Daily on Thursday. In it, an oversized European man is shown eating off four plates of food, and extending an empty fifth plate towards a smaller Chinese man eating rice from a bowl. "Can I have some more, please?" the European asks.

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About the Author
Senior International Correspondent

Mark MacKinnon is currently based in London, where he is The Globe and Mail's Senior International Correspondent. In that posting he has reported on the Syrian refugee crisis, the rise of Islamic State, the war in eastern Ukraine and Scotland's independence referendum.Mark recently spent five years as the newspaper's Beijing correspondent. More

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