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BEIJING, Sept. 18 (Xinhuanet) -- Lingering debt problems in the U.S. and Europe are intensifying fears of a double dip recession, and reports that China might consider buying Italian bonds sparked a heated debate.
From the inevitability of a Greek default to fiscal problems in the U.S, the possibility of a double dip recession has become a major concern for every country.
To make things even worse, European finance ministers ruled out efforts on Sept. 17 to spur the faltering economy, stating that the 18-month debt crisis leaves no room for tax cuts or extra spending to stimulate an economy on the brink of stagnation.
Some analysts believe that the European crisis is no longer a European crisis. It is more dangerous than the one that caused Lehman Brothers to collapse, as it involves not only banks but also governments and it comes at a time of great weakness. So it could easily extend to the rest of the world and engulf the global economy.
If a way out cannot be found for the European crisis, it would inevitably trigger a collapse in Chinese exports.
Global markets have been looking to the economic locomotive to step in and buy bonds of financially ailing European countries.
Among the world's major economies, "China seems to be the only hope" to give the world economy something of a boost in the coming year, said Wang Yan, managing editor of China Investment Strategy publication.
The United States, the world No. 1 economy, is experiencing broad economic weakness, including slow growth, fiscal weakness, political paralysis and a middle class with diminishing prospects. It is struggling to reach political agreement on any stimulus package
Europe has the same problem – and a severe government-debt crisis is on top of it. While China, whose rapid expansion accounted for more than half of the global economy's growth over the past couple of years, is on track to continue playing the role of an economic locomotive, Wang said.
But some bankers and business elites held a different a point of view.
Some countries have overestimated China's role in the global economy, Guo Shuqing, chairman of China Construction Bank Corp. He said he doesn't think China can purge the world of the economic crisis.
China must think twice before investing part of its 3.2 trillion U.S. dollar foreign-exchange reserves in European countries hit by the sovereign-debt crisis, said Wang Yong, a professor at the central bank's training institute in Zhengzhou, central China's Henan province.
He wrote in an article published in the Shanghai Securities News that it might be more feasible for China to help European countries by buying stocks, real estate, high-tech products and planes rather than purchasing bonds.
At the World Economic Forum in Dalian, when a group of five Chinese business leaders were asked whether China should save the world economy, most of them responded that China should take care of its own business first.
Liu Changle, chairman and chief executive of Hong Kong-based Phoenix Satellite Television Holdings, said, "When the world looks to us for help, we should keep cool and not feel too flattered."
Three of the four other panelists expressed a similar view.
China doesn't have the capability to help the world yet, said Liu Jiren, chairman and CEO of Neusoft Group, a software company. The biggest contribution China could make to the world is to keep its market open and nurture a middle class that will spend more, he argued.
Cheng Siwei, a retired deputy national parliament speaker, pointed out: "When it comes to external affairs, let's not stretch ourselves."
The only dissenting voice came from the former head of Google China and Microsoft China. "When the West looks to China for help, it's an opportunity for China to step up," said Kai-fu Lee, also the founder of venture capital firm Innovation Works.
He suggested that instead of investing in U.S. Treasury bonds, China could put its money to better use by investing in infrastructure and non-defense companies in the West.
Li Daokui, a professor of finance at Tsinghua University and an academic member of the central bank's monetary policy committee, also suggested that China should not blindly buy EU debt.
The purchase of Italian treasury bonds should be conditional, requires further study and China should be prepared for the worst-case scenario, he said.
Ding Chun, chief director at the Europe Research Center of Fudan University, said buying bonds is a direct way to deal with the debt crisis.
Encouraging message came from some Chinese officials.
China is willing to buy euro bonds from countries involved in the sovereign debt crisis "within its capacity," Zhang Xiaoqiang, vice chairman of the nation's top economic planning agency, said on Sept. 16.
China is prepared to offer assistance, Zhang told the World Economic Forum in a reiteration of comments Chinese Premier Wen Jiabao made on Sept. 15 at the event.
His remarks were echoed by another official.
"As a responsible nation, China will help European nations out of their debt woes based on its own capacity, as the move could also help China," said Chai Xiaolin, director of the Department of World Trade Organization Affairs at the Ministry of Commerce on Sept. 16.
Helping Europe solve its sovereign debt problems is in line with China's interests, Chai said on the sidelines of an economics forum, but she didn't specify what kind of help China should render.
China is willing to assist European countries hit by the sovereign debt crisis because it's in the nation's interests to do so and not because it wants to be a "savior," Chai stressed.
"We expect the EU could help address the unequal treatment Chinese companies have encountered under the WTO framework due to the market economy status, but this does not mean China will threaten to get the recognition from the EU," Chai added.
Both the signals from the two officials indicate that China will help European countries within its capacity. Europe should not rely completely on other countries to muddle through the crisis. As the old saying tell us: God help those who help themselves.