NY Times: "China is Europe's lifeline"

Beijing, Nov.2 (People's Daily Online) -- The New York Times published an Op-Ed article on October 27, saying that China is Europe's lifeline.

The European banking system is drowning, and there is a possibility that the financial contagion will spread to Spain, Italy and even France. Europe cannot muster cash on its own in part because most countries are fiscally stretched.

The New York Times article said: "With a United States essentially sidelined because of its own economic and fiscal weakness, it is even less of a surprise that the SOS is going out to China."

The article continued, "Only China, with its 3 trillion U.S. dollars in reserves, is now able to provide the magnitude of relief that Europe desperately needs."

The article then voiced its opinion on what China should do to "bail out" Europe.

The article said that China can help Europe bilaterally by back-stopping the stability facility, or by guaranteeing to buy Italian and Spanish bonds at a rate that would keep these countries' finances sustainable or by providing the International Monetary Fund with additional money to lend to Europe.

Although the benefits are evident for Europe, the risks in this bilateral approach are considerable. It would expose China to the charge of becoming enmeshed in European politics.

The New York Times article said that helping Europe by strengthening the IMF and increasing its lending would avoid some of these political costs, especially since China would not be directly involved in European politics and problems.

"These demands would be legitimate and indeed be welcome for the world because they would tether China more firmly to, and create a stake for it in, the multilateral system," the article concluded.