Support: Chinese Premier Wen Jiabao said his country will keep buying government bonds to help prop up the single currency
China has vowed to increase its support of the eurozone after pledging to spend billions of pounds propping up the single currency.
Premier Wen Jiabao said it will keep buying government bonds – the debts of stricken European nations.
In a boost for Greece ahead of a pivotal vote on greater austerity cuts tomorrow, Mr Wen said Europe could count on his ‘unremitting’ support.
However, according to billionaire speculator George Soros, the debt crisis has pushed the eurozone to the ‘verge of an economic collapse’.
It was all but ‘inevitable’ that at least one stricken member will have to exit the euro because of massive debts, the hedge fund tycoon warned.
Mr Soros said the EU had to come up with a ‘plan B’ to avert a catastrophe.
‘Fundamental flaws’ in the design of the currency union would leave crippled nations with no choice but to withdraw, he added.
Mr Soros warned: ‘The euro had no provision for correction. There was no arrangement for any country leaving the euro.’
In a devastating critique of the European response to the Greek crisis, Mr Soros accused political leaders of being in denial about the need for far-reaching reforms to avert the disintegration of the euro.
He said: ‘We are on the verge of an economic collapse which starts, let’s say, in Greece but could easily spread.’
His warning came just days after Bank of England’s Governor, Mervyn King, branded European attempts to shore up Greece as a ‘mess’.
Three-day visit: Mr Jiabao visited the MG car plant in Longbridge yesterday and will meet with David Cameron for talks today
Huge demonstrations are once again expected in Athens as the government there makes a final attempt to approve almost £25billion of cuts which are a condition of the latest bailout.
If the Greek parliament does not pass the austerity budget tomorrow, the nation will receive no more support and is likely to run out of money by the middle of next month.
But the turmoil engulfing the region has not diminished China’s desire to buy up more European debt. China has foreign reserves of around £2trillion and is the largest creditor to the United States.
Critique: George Soros attacked political leaders for being in denial of the need for far reaching reforms to save the euro from disintegration
At the start of a three-day visit to Britain yesterday, Mr Wen said: ‘China is a long-term investor in Europe’s sovereign debt market. In recent years, we have increased by quite a big margin our holdings of government bonds. We will consistently continue to support Europe and the euro.’
Mr Wen, who will meet Prime Minister David Cameron today, flew into Birmingham Airport for a trip intended to boost China’s commercial, economic and political links with Britain.
Business deals worth up to £1billion are expected to be announced during his visit.
As a lover of Shakespeare’s plays, the Chinese leader started with a tour of the house where the playwright was born in Stratford-upon-Avon.
He was escorted by Culture Secretary Jeremy Hunt, who said: ‘We want to have a broad-based relationship with China which encompasses political, economic and social dialogue.
‘But this visit is saying it’s not just about jobs, it’s about a broader cultural relationship which is the best possible way to make sure we understand each other and avoid the kind of misunderstanding that so can bedevil relationships, as has happened in the past.’
As human rights protestors demonstrated outside, Mr Wen also visited the MG car plant at Longbridge, which is owned by China’s Shanghai Automotive Industry Corporation.
The visit coincided with the launch of a new car, the British-designed MG6 Magnette, which will be assembled in the UK using parts from China.
Source: UK Daily Mail