An important time for China in the world
During a visit by Chinese journalists to Luxembourg, the Minister of Finance, Luc Frieden, underlined the importance of China in the world’s current political setting. “We are living very difficult but also fascinating times. The world has become more interdependent and global than ever before. As a world leader, China bears huge responsibility,” he said during a Q&A session with the journalists.
The Minister said that the key to successful financial services made in China would be to further open up to the world, “Growth is the result of open borders.” he said. He acknowledged that the world’s most populous country has already undertaken several measures in this regard: “China will have tremendous opportunities with the internalization and the opening of its market. Predictability will be a key issue to develop further. People only invest if they have certainty about the future. Stability and predictability are very important aspects, along with a sound legal and juridical framework, that investors often rely on”.
The Minister added that he is grateful that China hasn’t dropped Europe because of the crisis. “We very much appreciate China’s understanding during the crisis. The country has a huge amount of reserves in Euros and has kept those reserves. As a member of the International Monetary Fund, it has also actively participated in the solution of the crisis”.
Europe is interested in a stable China, just as China is interested in a stable European Union. One step that would bring us closer to a balanced economic world would be converting the Chinese renminbi into an international trading currency. Thus, the Luxembourg government is actively helping the local financial centre become the offshore European renminbi hub. With 500 million consumers, Europe offers an enormous market for Chinese investment.
Chinese investments in Europe are currently welcome like never before. The Minister is confident that within three to five years, Europe will have made its way out of the crisis. “A high level of debt is never positive. China has, of course, tremendous reserves and is on a different level of economic development than Europe. We have made some mistakes that we are in the process of correcting and I’m sure we will succeed, but the road is still very rocky”.
Thus, the Minister concluded that fiscal discipline is the magic formula. “I prefer discipline to austerity. Austerity measures boost economic growth in the short-term. But without discipline, this growth could have a short shelf life. We have to make sure that expenditures will not harm the economy or the cohesion of a society, but there is no alternative to that,” he emphasized. EA