7.2.2.3 The European Sovereign Debt Crisis
Regionally, the European sovereign debt crisis was only confined within the
Eurozone. However, the European debt crisis made market investors worried about
a collapse of the EUR; the European debt crisis rippled far beyond the regional level
and escalated to being a great event in globalfinancial governance. In order to
effectively cope with the European sovereign debt crisis, China provided vigorous
support to the EU at bilateral and multilateral levels. China took the initiative in
undertaking to increase capital injection into the IMF and supported the IMF’s
participation in rescuing heavily-indebted European countries. China also fully
exchanged information and views with the EU with respect to the development of
the European sovereign debt crisis.
7.3 Assessment of China-EU Relations in Global Financial
Governance in the Last Ten Years
Objectively, China-EU relations in globalfinancial governance were at a relatively
low level in terms of depth and breadth before the outbreak of the globalfinancial
crisis towards the end of 2007. This low level was mainly reflected in the following
two aspects:first, issues concerningfinancial governance were not core issues in
China-EU economic dialogues and exchanges and were at a status much lower than
that of China-EU trade and investment issues; second,financial issues (if any)
between China and the EU were concentrated more on the bilateral level, and more
attention was paid to issues directly related to the practical interests of China and
the EU.
The main cause of this situation was the severe imbalance in globalfinancial
governance between China and the EU. At the multilateral level, China’s voice in
globalfinancial governance was very faint, and China was not an important player
in the globalfinancial governance mechanism. Generally, it was very difficult for
vested interest parties in the power system to initiatively share powers with others;
for example, the economically gigantic China had a very low share of tranches and
voting power in the IMF and in the World Bank. As a strong participant infinancial
governance, the EU was unwilling to take, and was also uninterested in taking, the
time and effort to engage in dialogue and exchange with an unimportant opponent
since this was less meaningful for thefinal result offinancial governance. On the
other hand, China lacked substantive motivational forces for supporting its par-
ticipation in globalfinancial governance due to various internal restrictions. As
China’sfinancial sector was underdeveloped and was subject tofinancial restraints,
connections to the externalfinancial world were considerably limited and it was
also less affected by the globalfinancial crisis; for example, the impact of the 1997
East Asianfinancial crisis on China did not affect thefinancial level and was more
reflected in China’s foreign trade. Under such circumstances, internationalfinancial
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