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Eurozone SOS

Will China be Europe’s knight in shining armour?

In a new development in the Eurozone crisis, China has been approached about contributing to the Greek bailout fund.

While an injection of Chinese foreign exchange reserves would certainly alleviate matters, the desirability of China’s involvement is questioned. China can no longer be seen as a source of “dumb money”, and it is expected that should China indeed become involved in the financial rescue effort, certain demands will be made in return.

Piet Hein Huijgen, a senior expert in the European financial sector, states: “This is a good opportunity for China to diversify its investment portfolio, which now largely consists of USD. Having a large share in European bonds as well would afford it the leverage to quiet foreign criticism of its monetary policy.”