Premier Wen Jiabao told German Chancellor Angela Merkel that Europe must “strike a balance” between fiscal tightening and measures to promote growth. “Europe’s debt crisis has continued to worsen, giving rise to serious concerns in the international community. Frankly, I am also worried,” he said.
His comments mark a shift in Chinese policy. Beijing has until now backed austerity across Euroland, but the severity of China’s own downturn has begun to rattle policymakers.
Exports of electronic goods to Italy crashed 43pc in July from a year earlier, and sales to Germany fell 11pc. Caixin reported that processing trade to Europe fell 21pc.
The country’s two largest shipping groups COSCO and China Shipping both reported a drastic losses today. The Shanghai composite index of stocks threatened to break below 2000 today, the lowest since the Lehman crisis.
Mr Wen asked for clarification over whether Italy and Spain would adopt “comprehensive rescue measures” needed to unlock the EU bail-out machinery – and open the door to bond purchases by the European Central Bank.
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