China Discloses "Vital Self Interests" In European Bailout

Tyler Durden's picture

The country which has so far been doubling down on its losses in European bond exposure, much to the amusement of cynical onlookers, has finally disclosed that Europe is the locus of Chinese vital self interests, and that should Europe go down, one very major domino would be the implosion of China itself. Per Reuters: "China's "vital" interests are at stake if Europe cannot resolve its debt crisis, the Chinese Foreign Ministry said on Friday as it voiced concern about the economic problems of its biggest trading partner. At a media briefing ahead of Chinese Premier Wen Jiabao's visit to Europe next week, Vice Foreign Minister Fu Ying made plain that China had tried to help Europe overcome its troubles by buying more European debt and encouraging bilateral trade..."Whether the European economy can recover and whether some European economies can overcome their hardships and escape crisis, is vitally important for us," Fu said. "China has consistently been quite concerned with the state of the European economy," she said." And just like every time before when China has tripled and quadrupled, and now quintupled, on Greek, Portuguese and other debt, so this time will be no different as merely loading up an insolvent entity with even more leverage does nothing but shorten the half life of each additional "bailout." When Greece blows up, forget the other European countries: keep a close eye on China.


With Greece  on the verge of a debt default, investors will focus on whether China promises to buy even more debt from beleaguered European nations including Greece, and increase its investment in the region.

China is a natural prospective investor in European assets and government debt because it has $3.05 trillion in foreign currency reserves, the world's largest.

With a quarter of the reserves estimated to be invested in euro-denominated assets, it is clearly in Beijing's interest to help Europe survive its debt turmoil.

"We have supported other countries, especially European countries, in their efforts to surmount the financial crisis," Fu said. "We have, for example, increased holdings of euro debt and promoted China-European Union trade."

Beijing has said in the past that it has bought Greek debt, but has never revealed the size of its investment.

When in doubt, repeat a lie:

Since euro zone  debt worries first rippled through markets last year, China has repeatedly said that it has confidence in the single-currency region.

"We have hoped to help euro zone countries in overcoming the crisis, and this is also a measure that is beneficial to China's own economic development," Fu said. But mirroring deteriorating market confidence on Europe, China's central bank published a report this week saying the economic bloc risked worsening its problems if it did not contain debt levels.

Well at least the global Keynesian time bomb is now loaded in such a way that the smallest economy collapsing will literally destroy the central planning cartel of the three biggest economic centers of the world. Hopefully this means that the great reset is finally in sight, now that a bunch of Greek politicians have 5 days in which to finally decide the fate of the failed Bismarckian-Keynesian experiment.

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ZeroSpread's picture

Don't be so negative!  :-p  In every end lies a new beginning.

Gully Foyle's picture


When God closes a door he opens a window. Which makes many thieves happy.

LoneCapitalist's picture

"When God closes a door he opens a window"                                              Bondholders have to have something to jump out of.

Ahmeexnal's picture

Insolvent Austria is already selling it's Alps. China will be the buyer.

bigdumbnugly's picture

or is that in every lie begins a new end?

markmotive's picture

Meanwhile, the 'Hugh Grant of Economics', Niall Ferguson, predicts a 100% chance of Greek default:

writingsonthewall's picture

...and in the UK - the fightback begins.


June 30th - national walk out day. The 'host' is going to stop the flow of blood to the parasites.


Americans - spread the word - your world needs you. Let us remind the banks of where all that wealth comes from.

LudwigVon's picture

No silly, from the militaristic enforcement of the illegitimate currency regime, effectively encapsulating the life's labor of every human and their children.

End legal tender laws, Remove taxes from money, Repeal 1913

Foul Ole Ron's picture

Yes. The Anarachist Federation is going to show us all the way forward. Undoubtedly.

TheTmfreak's picture

As somebody who believes in actual Anarchy (self-government and self-rule) I fail to understand how they feel that getting behind the "anti-austerity measures" makes any sense. Now I can understand "selling your country down the river" but that is almost ALWAYS the case. The "workers struggle" is always used as a propaganda tool to mass sheeple.

Fighting for saving government "benefits"? These clowns can fuck off.

writingsonthewall's picture

Very bold from a man who just bent over and took it from the banks without any lube.


I am not surprised you don't understand - I suspect this is rather a common pattern in your life.


Maybe you need to concentrate on the difference between the 'government' and 'the peoples representative' - they are supposed to be the same...but they are not.

writingsonthewall's picture

....meanwhile...your rants on blogs are getting us......nowhere perhaps?


You are a classic 'sheepeople chancer' - you're waiting to see how well the reovolution does before you decide to join in.


Better to forge the way than follow the way.

NuYawkFrankie's picture

Is Niall Ferguson any realtion to Zh poster Turd Ferguson?

Cheeky Bastard's picture

630 billion eur in exposure; yeah, I'd lie too.

Gringo Viejo's picture

I believe Harry Truman used to refer to Chang Kai Shek as Cash My Check. Who knew?

qussl3's picture

Way to go to show your hand you dolts.


Forgiven's picture

How many more pieces of straw can that Greek donkey take?

edotabin's picture

Depends upon how fast IMF, ECB and China can remove the straw. Greece has no shortage of straw to add to the load though.

Re-Discovery's picture

All Hail to China!!! Our benign and generous master!!!!

ibjamming's picture

China???  The  master of the "West"?  Are you kidding me?  China is a fast growing teenager who is about to get schooled in how the adults handle things.  China just may get knocked back into the stone age.  It all depends of what we think they will do with their nukes.  Damn nukes, they throw a wrench into everything.  No leader wants to see mushroom clouds over their cities. never know what someone will do.

Paralympic Equity's picture

Well, today there was a rumour that China will end the CNY peg to the USD on Sunday, if you think that makes a lot of their reserves free for something else, and to be quite frank it is easier to finance Greece than the US, of course if there is no contagion (wich is already there, but nobody seems to notice it).

But how would this play out for the US, mmmmm not well i suppouse.

huggy_in_london's picture

So you think they are about to end the peg and allow a free float and free capital movment?  I doubt it.  They are struggling with competitivness vs rest of asia as it is.  That would merely complicated it.  Actually it might be a good thing for the US if they did, assuming the ccy rallied. Hence why I doubt it.  

Max Hunter's picture

It would be good for the U.S., which is why we have been asking for it and why China has been refusing to do it.

Urban Redneck's picture

Good for the BANKERS, maybe.

In the meantime, a CNY appreciation would be HORRIBLE for the MILLIONS of Americans living paycheck to paycheck at WALMART.


Seriously, when has the last time the US government even asked for or proposed something that would actually SOLVE a problem?

Big Corked Boots's picture


USD = last fiat standing.

Image of Ben looking over the global wreckage and yelling "I won! I won!"

max2205's picture


AldoHux_IV's picture

I had a feeling China adopted some of the worse set of economic thoughts from the western world-- they must've been sold something awful to think more debt would help a debt ridden situation. Unless of course they thought they could own parts of Greece and european countries on the cheap which would also be very foolish to think that individual sovereignty would be transferred so easily from the hands o the people to their corrupt politicians to the chinese. Futher adding that the current regime doesn't have the best interests of the people in mind. This kind of foolish thinking will certainly have deep repercussions for China as well-- what fucking idiots.

fajensen's picture

The Chinese have a few blind spots:

First, Chinese frimly believe that authorities everywhere can dictate outcomes in the same way that they can in China and other dictatorships;

Second, when a Chinese make a losing deal they lose "face" in public, which to them is just about the worst thing that can possibly happen in life. So long as the investment is not directly written off f.ex. by bankrupcy, they can change the terms or the perception of the investment - a Chinese in for making "a quick buck in the market" eventually becomes a Chinese interested in a "long term commitment to ensure stability and world peace".

That makes the Chinese almost perfect suckers for a Western economy where at least 1/3 of the BNP is generated by ripping other people off: The Chinese happily go out and buy Blackstone or Greek bonds because the lying filth... a.k.a former American presidents and leading European politicians guarantee it. Then they take a 90% loss and double down to avoid the "face" issue caused by realising that they were suckered by their special friends amongst the  gweiloo-leadership.... such as it is.

"We" know our sharks, the Chinese don't! But they will, eventually!!

shortus cynicus's picture

Just wait and watch.

Their master-plan is to wait until collapse happens, and then to officially seize all European assets in china (factories, patents, ...) as compensation, redirecting private suckers to their governments.

EU governments will accept it, as so called new form of paying taxes by the rich, and all will be fine :-)


fajensen's picture

Ahh - But: All of those European "assets" are already "seized"! 

A much under-published quirk in the procedure for foreigners setting up shop in China is that one must have a Chinese national as a sponsor ... and that said sponsor must own at least 51% of the stock in the Chinese "joint"-bwahaha-venture!

There is even a legal requirement that foreign business must not deploy fencing higher than 130 cm - for safety reasons; one would not want the industrial spies to break their damn necks.

EU accepts and even helps giving all the business, all the jobs and all the IPR away to China because 3'rd world living standards and ethnic clans fighting each other in Europe is the desired outcome. The East India Company People Management Strategy applied "here" - all those fucks got kicked out from the colonies, then they come home, and they continue to do what they do best!?

boricuadigm-shift's picture

Liquidation of assets... Selling US Bills and Bonds coming soon to a Central Bank near you!

OldTrooper's picture

Hopefully this means that the great reset is finally in sight

We could hope so.  However, don't underestimate the ability of the Bernank to extend and pretend.

Also, these chinamen (dude, chinamen is not the correct nomenclature) may turn out to be more savy than Timmy and the other morons we know and love.  I'd be interested in how much of their 'euro denominated assets' are in ports, real estate and private companies.  Probably not nearly as much as they have in bonds, but I'd wager the share is growing and that it includes (or will include) some fairly key facilities and industries.  The way I see it, it's a good time to be a buyer with plenty of cash.  Whatever happens, this could get very interesting - anything is possible when a major power's "vital interests" are at stake.

fajensen's picture

how much of their 'euro denominated assets' are in ports, real estate and private companies.

Does not matter, really. How does one take posession of the alleged assets located inside a sovereign state?

The state can and it will eventually, when the protests become violent enough, just nationalise the assets and "give them back to the people" or whatever. The Greeks may be bankrupt several times over but their army is not to be trifled with and they got all colors of violent movements to push the issue when the need is felt by enough people. The people will basically tell the foreign investors to go fuck themselves and then elect politicians, by election or by force, that think the same. The straight default will be much cheaper than choosing this route.

The "investors" should already have bets on default anyway. The real issue is that a Greek default will blow up Basel II and the designers of Basel II happens to be very proud and powerful people who never, ever, will admit to being wrong about anything.

chindit13's picture

As one who has spent thirty years in and around the Middle Kingdom, I take notice of someone who comes a'speaking truth.  Keep posting.

OldTrooper's picture

How does one take posession of the alleged assets located inside a sovereign state?

I'd expect the Chinese to be more subtle than some other major powers have been lately.  And I suspect that these are questions they've asked too.

I think you're right that some kind of military campaign could not be a serious option.  However, if the new government, that nationalizes the asset, is beholden to the creditor then military action is hardly needed - the new government does the dirty work (and the sheep feel much better about getting sheared by their new, popular government).

Will a new Greek government tell the Chinese to fuck off?  Hard to say, though everything I read indicates that most of their animosity is reserved for the IMF and ECB (and the current Greek government, of course).  The next few years, or decades, should be very interesting indeed.

Urban Redneck's picture

If the Greeks are stupid enough to desire the Chinese over the IMF, then they fully deserve the ass-raping they will receive.

SoNH80's picture

Abrogation, nationalization is ALWAYS an option when the creditor is a foreign nation without the military means to occupy/force payment a-la the U.S. in Nicaragua circa 1915.  I am increasingly convinced that the U.S., when the time comes, will simply unilaterally abrogate its debt to China.

YHC-FTSE's picture

I agree with other articles that suggest Greece has already been effectively written off from the EMU for a myriad of reasons (especially breaking news from Germany and the ECB stance on any further bailouts), so China's investments in the euro are hardly likely to implode as this article suggests. It sounds very much like wishful American thinking by the kings of schadenfreude. 


The eurozone (Not to be confused with the EU by stupid people) can afford to lose Greece, but Greece (In terms of individuals and SMEs) probably can't afford to lose the eurozone. Stating that it is the other way round and adding China into the mix is a little absurd, imo. Disclosure: I have NO vested interest in the euro. 

mberry8870's picture

Wasn't one of the lessons of the MBS debacle that if you have a pile of shit and pile more shit on that pile it doesn't make it investment grade it just makes a much bigger pile of shit?

shortus cynicus's picture

The funny thing is, that this 3 trillion cash reserves are THE CAUSE of crisis.

If somone in the system holds debt money back, he effectively prevent the debtor being able to pay debt back.

Without this reserves, the all ponzi-finance would collapse much earlier causing minor crisis.

The healthiest way would be, if Chinese would spend this money in Europe slowly and for irrelevant things, like sex and alcohol :-) That would not cause much rise in living costs and allow government to collect high taxes.


three chord sloth's picture

Of course the Chinese will keep on bailing out Europe... their political/business elites need somewhere to stash their millions for when they escape... and they all can't go to Canada. After all, what's the point in getting rich if you've gotta stay in China?

Foul Ole Ron's picture

Clearly you've never been to China. Fantastic place to be rich.

Monedas's picture

The Chicoms are given way too much credit.....from the MSM ! The inscrutable Commies have accumulated a shit pile of fiat ! The Commie pigs have run, squealing with delight to the slaughter house ! Greed is good ! Monedas 2011 The little red book....Mao's "hope and change" !

TwoShortPlanks's picture

Blah-blah-blah...for months now I've been saying that China will be buying the debt of those European countries which best represent China's future US Dollars of course...Fuck-it, might as well, be toilet paper soon enough anyway.