China Is Not Going To Bail Out Europe

China appears to be largely uninterested in bailing out the debt-ridden countries of Europe. Despite concerns that Beijing might buy debt and use it as leverage, the calculation by Beijing appears to be that this would be a bad bet, and that it wouldn’t be much of a good investment in the first place. An advisor to the Central Bank of China says that buying European debt would be a mistake.

Will China rule over Europe via debt?

As the Financial Times has reported, “…analysts and European officials say China’s actual purchases of Greek, Portuguese, Spanish and Italian bonds have been quite limited and its Euro-denominated foreign reserves are overwhelmingly invested in much safer German debt.”

China is not going to do Europe any favors–nor should they. Why should the wealthy nations of the west expect a relatively poor country like China to lend us money? And from the strategic standpoint, Beijing seems to believe that while as Proverbs reminds us “the borrower is the slave to the lender,” this situation is perhaps different. I’m not a fan of John Maynard Keynes, but he was probably correct when he said: ‘If you owe your bank manager a thousand pounds, you are at his mercy. If you owe him a million pounds, he is at your mercy.'”