EU/China: China is playing currency politics in Europe. You know what, we're so nice we'll even buy Greek debt, it says. But China's willingness to support the euro zone's most stricken economy looks like a bribe. What China wants is to be free to pursue its own mercantilist economic policy. The euro zone is unlikely to buy that bargain - and certainly shouldn't. The better course is to join the United States in pushing China to let its currency appreciate.
The offer to buy Greek debt came from Wen Jiabao, the Chinese prime minister, at the weekend. Wen is beginning a European tour in which he will seek to foster good relations with European leaders. Good relations between the euro zone and China are welcome. Part of them should be greater change in Chinese exchange rate policy.
China's offer to buy Greek debt reflects the huge amounts of reserves it has at its disposal. Its power reflects a purse fattened by huge trade surpluses. The EU's bilateral trade deficit with China amounted to 133 billion euros in 2009 and was up by an annual 9.5 percent to 71.4 billion euros in the first half of this year.
In the past two difficult years for the global economy, China has gained a big competitive advantage over other nations by keeping the yuan cheap while other emerging market currencies in Asia and elsewhere - notably the Brazilian real - have appreciated. The dollar meanwhile has been weak against the euro. The struggling zone might be seen as being at the butt end of Chinese trade policy.
On Tuesday, Angela Merkel, the German chancellor, could and should remind Wen of that. Nicolas Sarkozy, the French president, for his part, is rumoured to be keen to press China for more yuan appreciation at the G20.
Such pressure is ultimately good for China, too. The Middle Kingdom should not exacerbate global imbalances by continually ramping up its production of artificially cheap exports. Nor should it risk building more and more export capacity that ultimately customers cannot pay for - even with a bit of help from their big friend.
