China 'essential to European recovery'

The former leaders of Germany and France told a financial conference over the weekend that a stabilizing Chinese economy will prove essential to economic recovery in Europe, as it continues to battle against financial uncertainty and an ongoing debt crisis.

Speaking at the 2nd Huatuo CEO Forum in Shanghai on Sunday, Gerhard Schroeder, former chancellor of Germany, and Nicolas Sarkozy, former president of France, both highlighted the important role that China will play in helping the troubled region over the next couple of years.

A worker supervises the loading and unloading of containers at Qingdao port in Shandong province. Participants at the 2nd Huatuo CEO Forum in Shanghai on Sunday said China’s stabilizing economy will help Europe and the rest of the world. [Photo/China Daily]

Schroeder, who cut taxes in Germany and reformed its labor markets as chancellor until 2005, said Europe "should thank China" for its efforts to support the global economy during the 2008 crisis and subsequent debt problems.

"But economic ties must be further strengthened, in terms of a larger share in each other's companies," said Schroeder, who has been credited by many economists as insulating Germany against the debt crisis that has now befallen southern Europe.

He added that Europe is open to Chinese investors and is interested not only in the capital it brings, but also its knowledge and technologies.

Sarkozy, the former president of France who lost in the election earlier this year to Francois Hollande, said that Europe was in the middle of a transition and will go through a "very tough two years".

He added: "It is because of the toughness of this, that we invite Chinese investors to choose Europe as their destination, as these two years will be the prime time to invest."

The sentiments of the two former leaders were shared by other speakers at the event, including Philipp Hildebrand, the head of the Swiss National Bank until January this year, who now oversees the largest institutional client relationships at New York's BlackRock, the world's largest fund manager.

Hildebrand told delegates that the eurozone is back on the road to rehabilitation, but agreed with Sarkozy that a full recovery won't take place in the next year or two, until fiscal reforms have worked their way through the various affected economies.

"In this environment, it will be very helpful if the rest of the world economy is robust," he said.

"So it is very good news for Europe that the Chinese economy has only seen a temporary slowdown, and data suggest that it is reaccelerating somewhat," said Hildebrand.

The eurozone was rocked again last week after France was deprived of its triple A rating by the international ratings agency Moody's, raising further concerns that the debt crisis may further deteriorate.