China urges EU to reach debt deal without delay

Mon Oct 24, 2011 6:49am EDT
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By Chris Buckley and Kevin Yao

BEIJING (Reuters) - China urged the European Union on Monday to deal with its debt crisis as soon as possible and prevent contagion from spreading, as the country's number four-ranked leader arrived for a visit of the continent, including Greece.

"We hope that the EU countries concerned will reach a comprehensive settlement plan as soon as possible and adopt effective measures to ease the euro debt crisis and prevent the crisis from spreading further," Foreign Ministry spokeswoman Jiang Yu told reporters.

"China is confident that the EU has the ability and wisdom to overcome these straits. We have always provided what help we can to the countries concerned via bilateral and multilateral channels."

The official Xinhua news agency, in a commentary, urged Europe to get its act together.

"It's time for European leaders to refrain from calculating and paltering and show their wisdom, determination and drive to step out of the crisis-cast shadows," it said. "Europe has missed some of the opportunities to defuse the crisis, and small steps over the past two years have proved impotent."

At a summit on Sunday, European Union leaders neared agreement on bank recapitalization and discussed how to leverage up the 440 billion euro ($600 billion) European Financial Stability Facility crisis fund to stave off bond market contagion.

Sharp differences remain, however, over the size of losses private holders of Greek government bonds will have to accept and how to scale up the EFSF without EU governments contributing more capital themselves. Final decisions were deferred until a second summit on Wednesday.

The mostly likely method for leveraging the euro zone's bailout fund involves using it to provide bond insurance while combining its firepower with a special purpose vehicle (SPV) drawing in cash from China or Brazil, EU officials said.   Continued...