European countries must act decisively to resolve the eurozone debt crisis or risk having some member states forced out of the single currency, China's top newspaper said in a front page commentary on Saturday. The call came in the overseas edition of the People's Daily, the official paper of the ruling Communist Party.
While such a piece does not amount to the official government line, it underscores the worries in Beijing about the safety of its investments in the eurozone. "Europe is standing at a crucial juncture in its history. It must show great wisdom, great boldness and great resolve, and genuinely go into action," the commentary said. "If it is able to set up a fiscal union, Europe can still turn its luck around. If the decision comes too late, some (euro) members may be forced to pull out." While that outcome would be painful, it could work if the countries still remained in the European Union, added the commentary, whose author was identified as Qin Hong, an expert on international studies.
"But if Europe keeps dilly-dallying, the situation can only worsen and gather speed. Outsiders who want to help will not dare, and then the eurozone may really disintegrate. Without doubt, this would be a huge disaster for Europe and the world." China's pile of $3.2 trillion in foreign exchange reserves, the biggest in the world, keeps growing thanks to trade surpluses and capital inflows.
Analysts estimate that China holds about a quarter of its foreign exchange in euro assets, and there are few other places for it to park investments of such a scale. The government has said it has confidence in the euro and in the EU's efforts to tackle the crisis. But a chorus of voices has revealed anxieties about the security of euro assets.
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