Written by Nasos Mihalakas, Contributor

Amid all that is happening in the Arab world (escalating violence in Syria, and nuclear brinkmanship by Iran) as well as the never-ending epic saga of the Greek sovereign debt crisis, comes the delayed EU-China summit in Beijing.

Held on Valentine’s Day, it was full of promises for mutual love, respect, and accommodation from both sides. Although the Chinese Premier promised to help resolve the EU debt crisis again (see: Chinese Premier Wen Jiabao vows to help on Eurozone debt, and China to Get More Involved in Europe Rescue, Hold Euros), no specific promises were made about contributing to the European bailout fund.

What the EU needs more than anything right now is a firewall to contain the spread of market-driven uncertainly over the viability of government debt in the Mediterranean member of the EU. From Greece to Portugal, governments have run large public debts and are having a difficult-to-impossible time securing financing of their debts from the private sector.

With this in mind, EU leaders created the European Financial Stability Facility (EFSF) in May of 2010 (and in the spring of 2011 its permanent successor, the European Stability Mechanism), with the objective of bailing-out Eurozone states in economic difficulty.

The EFSF is a special-purpose vehicle financed by members of the Eurozone to address the European sovereign debt crisis. The EFSF is authorized to borrow up to 440 billion euros, of which 250 billion euros remained available after the Irish and Portuguese bailout. The more money available to the EFSF, the less likely it is that the sovereign debt crisis of Greece and the other southern states will spread to the core of the Eurozone.

EU leaders have been trying to shore up support for the EFSF, by reaching out to the IMF, the U.S., the oil producing states of the Persian Gulf, and other rich countries around the world. Of all the nations out there, China has been wooed the most by European leaders to help fund the temporary EFSF, and its permanent successor, the European Stability Mechanism. Considering the current political climate in the U.S. (election year, partisan gridlock) and the Middle East (the Arab Spring, tensions in the Gulf), only China, with the world’s largest foreign exchange reserve ($3.2 trillion, and growing) is uniquely positioned among all others to help buttress the Eurozone and the Euro from collapsing under the weight of sovereign debt.

Yet, once again, both the Premier of China Wen Jiabao and the Governor of the Peoples Bank of China Zhou Xiaochuan promised to come to Europe’s rescue without making any specific promises. What they both said, in many different ways, was that China stands by the EU as its very important economic and political partner, but it will have to wait for the right time and the right opportunity to invest in Europe. In particular, the press statement released after the talks listed 31 points of agreement covering a range of issues from cyber security to urban development, but made no mention of the Eurozone crisis.

China is indeed considering funding options for the EFSF and the ESM through the International Monetary Fund. According to Mr. Zhou, China can channel its investments through the central bank or the China Investment Corp., which manages the country’s foreign-exchange reserves. Another source of help could come from other government financial institutions, including the China Development Bank and the Export-Import Bank of China, or other private Chinese institutional investors.

However, throughout the years, China has always focused on maintaining good bilateral trade relations with separate member states, rather than with the EU collectively. Europe is China’s biggest trade partner, with trade worth a combined 560 billion euros last year alone. Nonetheless, instead of providing tangible financial support to the Euro and underwriting the longevity of the EU (its main export destination), Beijing is looking for “investment” opportunities in Europe that will yield the highest return.

This “opportunism” from China is what causes countries around the world to be suspicious of Beijing’s intentions and fear any Chinese involvement in their economies. The EU sovereign debt crisis represents the ultimate proof that China is not ready to lead, as well as not ready to appreciate its place in the world we live in and help with safeguarding the global economy.

Rescuing the Eurozone as a destination for its exports and preserving the euro as a reserve currency is in China’s national interest. It’s a small price to pay now for economic growth and financial stability in Europe, both of which will prove immensely beneficial to China’s economy in the long run. Yet, once again, Beijing is confirming what analysts have been suspecting all along: Beijing does not truly understand how interconnected the global market is, and Chinese officials in Beijing cannot see beyond the boundaries of their Middle Kingdom.

China promises to come to Europe’s rescue one more time, but it is more likely that they are buying time to see which way the wind blows, and how to maximize returns on their investments.

Nasos Mihalakas is a Washington DC-based writer and foreign policy analyst. During the past ten years he worked as a policy analyst for both a Congressional Commission advising members of Congress on the impact of trade with China on the U.S. and global economy, and for the U.S. Department of Commerce investigating unfair trade practices and foreign market access restrictions. Currently he is an adjunct professor at UNYT, and a contributing analyst for Wikistrat.

Original: http://www.diplomaticourier.com/news/economy/750