The euro crisis still has European states in its grip with measures such as the euro bailout fund and European Central Bank subsidies worth millions failing to do more than plaster over the wounds.

China, on the other hand, is booming and has become the world's second largest economy. It seems only logical that the EU would look to the Asian giant for help with its massive currency reserves in the hope it could support the euro by buying European bonds.

At a conference entitled "Magnet China" this month in the German city of Düsseldorf, experts and academics discussed how China could help.

Guest speakers included Olin Liu of China's leading investment bank, China International Capital Corporation (CICC), Holger Schmieding of Berenberg Bank, and German FDP politician Alexander Graf Lambsdorff, who is also the vice-chair of the Alliance of Liberals and Democrats for Europe in the European parliament.

Lots of homework

The debate focused on the "homework" that the eurozone has to do. Olin, Schmieding and Lambsdorff all agreed that EU member states first have to help themselves before other countries such as China can lend effective support.

Schmieding illustrated this approach by saying that in China, where there is neither a state pension scheme nor unemployment benefits, people often rely on their families before turning to the state for help. He said it should be like this in the eurozone too - the states should consider themselves as members of a family and first create a safety net for themselves and then external help would then be effective.

Lambsdorff for his part argued that within the next few years measures had to be introduced to protect vulnerable economies such as Spain and Italy. "So that these countries can implement structural changes. It will surely take 10 years for the measures to become effective. And we need a much larger safety net than the one we have now."

Moral justifiability?

The conference participants also discussed the moral justifiability of asking developing countries for help. Lambsdorff had a clear answer: It is immoral to force an EU country such as Slovenia, which has a very low GDP, to support Greece which is wealthier, he said. However, he pointed out that China could decide for itself whether to support other countries or negotiate a trade deal.

When trying to decipher whether China was playing the role of savior or profiteer, Lambsdorff said China was an important economic partner and a great source of investment.

He expressed his certainty that the euro would retain its second place after the US dollar as a world currency despite the current problems.

Schmieding was even more optimistic, describing the eurozone's fiscal problems as "labor pains," which will lead to a more dynamic and unified Europe.

Author: Phyllis Kuhn / sb
Editor: Anne Thomas