Underlining the interconnectedness of the world’s economy, China is actively moving to support European efforts to contain a sovereign debt crisis and accelerate a recovery there.
In the past several weeks China has pledged to buy billions of bonds from (i.e. lend to) troubled economies like Spain and Greece. Billions more in trade deals are in the offing.
Why? China is heavily dependent on buoyant European and US markets for its own future economic success.
Today bilateral trade between China and Europe has surged to $100m a day - up from $100 a year less than a decade ago, the New York Times reports.
In short, ‘In embracing Europe, China helps itself’, as analyst Liz Alderman explains.
As Ken Wattret, chief euro-zone economist at BNP Paribas puts it,
“If you’re an export-driven economy like China, and the EU and the euro zone are your key export markets, it’s in your interest to stabilise the financial and economic situation [there].”
There are also immediate reasons for China’s actions.