China should await workable plans from Europe before Beijing puts money into any bailout package, an adviser to the Chinese central bank said on Friday, adding that China should insist on "certain controls" over how the money will be used. Li Daokui told a forum in Beijing that China would also likely work with other BRICS countries, namely Brazil, Russia, India and South Africa, in possible moves to help Europe overcome its debt crisis.
"If we (China) inject money, we must have certain controls. We cannot say that we give you money and you spend the money at will. You are the rich, you borrow money from the poor. It's not right for you to continue to lead a luxurious life," Li told reporters.
Li, who is also an economics professor at Tsinghua University, sits on the 15-member monetary policy committee of the central bank but does not have real influence on key decisions on interest rates and the yuan. China must look at Europe's evolving sovereign debt crisis closely as the region is China's largest trading partner, he said.
"We should pay high attention to economies of the US and Europe as we live in a globalised economy. If Europe runs into trouble, it will not be a small issue for China," Li said. Intense European pressure forced debt-stricken Greece to seek political consensus on a new bailout plan instead of holding a referendum after EU leaders raised the prospect of a Greek exit from the euro to preserve the single currency. "For Europe, we cannot look on and not help," Li said, but added that a media report that quoted him as saying China could buy $100 billion in European bonds was just a "theoretical figure." Most of China's $3.2 trillion foreign exchange reserves had already been channelled into foreign assets - mainly in the United States and Europe - which help stabilise global markets, Li said.
Li added that Greece's possible exit from the euro zone could be a "disaster" but he reiterated his view that the US fiscal health is worse than Europe's. Chinese Foreign Ministry spokesman Hong Lei, speaking at a daily briefing, said Beijing supports the steps Europe has taken and hopes it takes "proactive measures to overcome the present difficulties, stabilise global financial markets and push for Europe's recovery and growth". Li forecast a modest narrowing of China's trade surplus this year to $150 billion to $160 billion, or about 1.6 percent of gross domestic product. The surplus as a percentage of GDP, he said, could dip further to nearly zero in the next two years.
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