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Will China Save the Eurozone?
Nathalie Weeks and Tom Stoukas of Bloomberg report, China Will Buy Greek Bonds, Support Shipping Industry, Wen Says in Athens:
China
plans to buy Greek bonds to support Greece’s shipping industry and
strengthen relations with the European Union, Chinese Premier Wen Jiabao
said following a meeting with Prime Minister George Papandreou in
Athens today.
“China has
already bought and holds its Greek bonds,” Wen said in joint comments
with Papandreou today, which were carried live on state-run ET-1
television. “It commits, very positively, to buy new bonds to be issued
by Greece.”
Greece received a 110-billion euro ($151
billion) bailout from the EU and International Monetary Fund in May to
avoid default. The country, which has been locked out of international
credit markets, plans to issue new bonds in 2011.
In
the first visit to Greece by a Chinese premier in 24 years, Wen said he
wants to signal a vote of confidence in Greece and the European Union
in overcoming the international financial crisis.
“With our
common efforts the total mass of imports and exports between the two
countries in the next five years can double to $8 billion,” Wen said. He
called on Chinese businesses to invest in Greece.
Shrinking Economy
Papandreou
is seeking investment to help an economy that his government forecasts
will shrink 4 percent this year and 2.6 percent in 2011. He pledged
austerity measures worth about 14 percent of gross domestic product over
four years in exchange for the loans from the EU and IMF.
Wen
said a $5 billion shipping fund will be set up to tighten relations
between the countries’ two maritime industries and facilitate the sale
of Chinese vessels to Greeks.
The two leaders will today visit
Piraeus Port, Greece’s biggest, where Asia’s third-biggest container
terminal operator has a 35-year concession to run some operations. China
plans to deepen its Piraeus investment to move 3.7 million containers a
year by 2015.
Cosco Pacific Ltd.
won the concession to run container operations at Piraeus Port’s Pier
II and build and run Pier III in 2009. Greece’s government owns 75
percent of Piraeus Port Authority SA, the company that manages the harbor.
Wen
will speak in the Greek parliament on Oct. 3, Ambassador Luo Linquan
said in an interview with China’s state- run news agency Xinhua.
In
June, Greece and China signed 14 agreements in fields including
shipping, construction and telecommunications during a visit by Vice
Premier of China Zhang Dejiang.
In other news, Reuters reports that China, Greece urge macro-economic policy coordination:
The "The "To this aim, it is necessary for each country to strengthen China supported EU efforts to increase supervision on credit rating agencies and set up an independent European one. "The Chinese side supports the initiatives of EU member states' leaders China "Promoting the Doha trade talks is an essential step to open up the Wen and Papandreou attended the signing ceremony of 13 deals after their talks, Here Second, Greek bonds Third, China is Finally, this
world's nations need to coordinate their economic policies for global
recovery to find a sure footing, Chinese Premier Wen Jiabao and his
Greek counterpart George Papandreou said in a joint statement.
global economy shows signs of gradual recovery but many uncertainties
remain," the two leaders said in the statement, issued on Saturday by
Papandreou's office after the two men met in Athens.
coordination of their macroeconomic policies for the global economy to
recover fully," the statement said.
to strengthen supervision and publish information on credit agencies,
as well as the creation of an independent European credit rating
agency," the statement said.
and Greece also expressed their opposition to trade protectionism.
world economy and strengthen growth," it added.
which covered areas concerning cooperation in maritime transportation,
loan, telecommunication, export and cultural exchanges. The two countries also issued a joint statement on deepening their comprehensive strategic partnership.
is my take on these developments. First, China is smart to invest in
Greece now. They are seizing a golden opportunity to develop a strategic
partnership within the heart of Europe. Greece's ports will serve as a hub for
Chinese goods -- another gateway into Europe.
are ridiculously cheap. Ten-year bonds trading at 11% is simply outrageous. The carry alone justifies taking a position. I just returned
from Greece and while things are bad, they're nowhere near as bad as
mainstream media make them out to be here in North America. The Chinese
and Norwegians will make money on Greek bonds whereas North American
pensions shunning Greek debt fearing reputation risk will lose out big.
Again, 11% on ten-year bonds is ridiculous and it tells me that a lot of
so-called experts don't have a clue about how the Greek economy
operates or how to properly assess the risk of a Greek default or
restructuring.
sending a strong signal that it's willing to help out the Eurozone. I
wouldn't be surprised to see other southern European nations sign
strategic partnerships with China. Don't forget, the Chinese are already
investing billions in Africa, and they're a leader in solar energy.
That's another reason why I'm bullish on solar and why I believe China
is making the right moves to eventually be a key player in the renewable
energy sector. In the future, I see Chinese backed solar farms in
Africa, Greece and other southern European nations selling energy to the
rest of Europe.
is bullish for stock markets and risk assets. Jittery investors were flocking into the
bond market fearing the worst. It was a complete overreaction. China is
on the same page as the Fed, meaning reflate & inflate to avoid
global deflation and social unrest at home. Stay long stocks, but pick
your sectors well or you'll underperform your indexes.
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Well conventional wisdom says-"Money seeks returns;No matter how or where"
But look around- Central banks 'invest' in 30 year US treasury bonds at 3-4%
Pension funds 'invest' in Mortgage based derivatives for 5-6%
World is full of fiat money with very few safe investments.
APPLE is good for yer physical and financial health
maddy10
First thing in investing in China is return of capital not return on capital.
When push comes to shove, it is still a communist, central planned Fascist state.
Sweet! Maybe soon we will see these ships showing up on the bay like all those knock off quads and dirt bikes. At least we know they will be copied from reliable models
themselves from any threat to their power by the peasants. It is obvious
they value this money far more for the power it buys them then for its
economic value. Keep this in mind the next time someone praises the Chinese
economy. A country that is managed based on power will always have faulty
economic figures. See also: Why a Socialist Economy is "Impossible" by
Joseph T. Salerno at http://mises.org/econcalc/POST.asp
Further, the Chinese communists have clearly confused GDP for wealth. I
says this because 50% of their GDP growth comes from construction. They are
now knocking down perfectly good buildings, railway stations and highways in
order to build new ones. This shows up as an increase in GDP but it is a
net destruction of wealth. See: Bastiat's parable of the broken windows.
http://mises.org/daily/3804
You are absolutely right and I see all of these calls to "Learn Mandarin" as the same to "Learn Japanese" in the late '80s. Worse even, because of the economic disparities in that country. Without the US consumer to buy their chintzy garbage, they will be in a bad way.
It really is an amazingly screwed up country on so many levels and in so many ways; I understand there's some stock available in Solar Cell Manufacturers, tho.
And who says that colonialism is dead?
In fact, it is alive and well in the 21st century --- it is merely being fought in the arena of finance instead of on the field of battle. I guess Africa and Latin America are not enough for the ever-expanding Chinese. But they do have over 2000 years of lost colonial expansionist opportunities to make up for (aside from hapless Tibet).
Better brush up on your Mandarin, Leo ---- the best-paying jobs always go to the lackeys who can speak their masters' tongue. And we all know how you DO love to grovel at the feet of those in power.
"Chinese... do have over 2000 years of lost colonial expansionist opportunities to make up for (aside from hapless Tibet)" Taiwan and Vietnam among others would take issue with their omission.
Colonialism cant be dead as the US is a colonial state itself.
This little annoyance is going to be taken care of when the indigenous get wiped out by attrition.
Out with the USA Empire and in with China once again resuming their Empire as a leader in the world. Very interesting.
You don't tend to think things all the way through, do you?
That is a great question... and should be asked to any politician or person employed by the financial sector from the Federal Reserve and FDIC all the way down to your local banker.
If you mean global war, China has very advanced weapons and far greater manpower too.
China has enormous excess capacity and they are desperate to secure export markets. I see this as being more like Nortel offering credit to any/all Internet start-ups so they could buy Nortel products. China is offering vendor financing to a country that won't pay them back. Desperate merging with desperate.
The uncouth servicing the incompetant.
Nicely put. China not only has excess capacity but it also has currency reserves it can't wait to get rid of. Trade some currency for an 11% bond in the same currency? Why not? Not much to lose (in a sense they have the same default risk). Maybe, just maybe they get access to some real resource production (as like in Africa). And you get some orders for some goods (ships) in the bargain. Doesn't seem like such a good deal for Greece to me.
Leo, you're probably one of those rare birds that actually believes what the EU FinMins spill out of their mouths...
Leo, you wanna bet something? I bet Greece restructures its debt within the next 12 months. If I win, you never comment again in a non-Leo article. If you win, I'll never post on ZH again. You game?
Leo, never heard from you on my wager, and your article (thankfully) has moved off the front page. P*ssy. Any time, any place. You just let me know if you'd like to man up, or if you prefer to lurk in the shadows and make your silly Chinese solar calls.
p.s. you see the truck-loadings fall off? There goes one of your green shoots.
joe
now be gentle with Leo, he gets emotional and all....
Maybe Tyler uses him as a foil and we just get sucked in....
You would think with the Greeks having built the Trojan horse, Leo might recognize a wooden edifice built on wheels that smells like bird's nest soup.
But alas Leo's emotions always cloud his thinking.
Leo-nidas asks that you stand.
Xerxes asks that you kneel.
China will only ask that you "service your debt".
We got 300 billion euros of debt to service:
Leo
Isn't the guy with the sword a Scotsman in Greek clothing ?
Appropriately enough, dying with an arrow through his heart.
Leo, would that you were somewhere in that pile of corpses behind Leonidas. But not to worry: your statist, theiving, perverted Keynesian theories and dogmas already reside in the intellectual underworld, only being animated today by the lust for power by the sociopathic elite at whose feet you kneel.
So Greek Bonds = the Eurozone or did you just bank on attention-getting headline with no substance?
There are enough mediocre financial columnists out there, maybe take up golf instead.
Or knitting; something that doesn't involve typing. the article is quite amazing; I was struck speechless.
That's just China saying, "How else could we unload this garbage pile of 2 trillion US$?"
+1
Exactly. China is just playing the European dupes in order to buy time to unload their dollar positions and to accumulate hard assets.
Welcome to LeoWorld! Where up is down, black is white, servility is honor, corruption is praiseworthy, surrender is bravery, and unsustainability is forever.
China may or may not save the Eurozone, but who will save the many poor and hapless pensioners from Leo's statist, Keynesian insanity?
God Bless America ... +1.
Greek bonds are just the beginning. China is sending out a strong signal, so cover while you still can shorty!
LoL!Chinese leaders aren't stupid
They are waiting for tech transfer from Japan, US companies
Once they think they can manage on their own they will let their currency fly and lo
1 Yuan will be worth 10 dollars instead of other way round.
Those toiling chinese will have their day someday!