Official defends foreign reserves
Updated: 2011-12-03 09:04
By Li Lianxing (China Daily)
BEIJING - China cannot use its foreign exchange reserves to rescue other countries, Vice-Foreign Minister Fu Ying said on Friday.
"The argument that China should rescue Europe does not stand, as reserves are not managed that way," Fu said.
She stressed that China's $3.2 trillion in foreign reserves should be managed under the principles of "safety, liquidity and proper profitability."
"China's purchases of European bonds, International Monetary Fund bonds and US bonds are also based on those principles," Fu said.
There are many misunderstandings about the use of China's foreign reserves, she said.
"Foreign reserves aren't domestic income or money that can be disposed of by the premier or finance minister," Fu said. "Foreign reserves are akin to savings, and their liquidity and safety should be ensured."
Since the outbreak of the European financial crisis, China has increased its imports from the continent, with trade volumes up 20 percent over last year, Fu said.
"China is not absent from international efforts to rescue Europe. It has been a positive and healthy participant," Fu said.
She also said that China's investment in Europe should be de-politicized, adding that China will not seek power and interests through financial means.
"Successful investment should be reciprocal. We hope our economic activities are not interpreted from a political prospective and are not imbued with political interests. We should follow market economy principles," said Fu.
She was disparaging of a trend arising from the global financial crisis in the Western community that politicized issues concerning China.
"We should treat each other with a moderate and impartial mentality. That will make bilateral relations easier to handle," Fu said.
Feng Zhongping, director of the Institute of European Studies at the China Institutes of Contemporary International Relations, said it is impossible for China to save Europe, but help from China is vital.
He said economic cooperation between the two sides should be in line with economic principles, so the priority of China's investment in Europe is to ensure the safety of its capital.
"Whether China should buy more European bonds depends on the evaluation of the future of those bonds," Feng said, "while China can invest more in infrastructure construction and property in Europe."
Feng said one of the reasons for politicizing bilateral cooperation is mistrust from Europe that China might take control of it as a debtor.
He Maochun, professor with the Institute of International Studies of Tsinghua University, said the potential of more cooperation between the two sides outweighs misunderstanding and conflicts, but mutual respect and recognition should be achieved.
"Different economies should respect each other and it's unfair that advanced economies require developing ones to apply the same standards," he added.
Fu added that the cooperation between China and Europe is mutually beneficial and their interests have been deeply intertwined, so China will continue to support Europe.
She said the right choice for Europe now is to accept and welcome the rise of newly industrialized countries and gain new motivation for growth from them.
Europe has become China's biggest trade partner and is also the most important source of technology and one of the major investors in China.
In return, China imports more than $100 billion annually from Europe and has created more than 1 million local jobs since China joined the World Trade Organization in 2001.
Xinhua contributed to this story.