TEXT OF INTERVIEW
STACEY VANEK SMITH: It’s been a very long December for Europe. Ireland had its debt downgraded. Portugal and Spain look poised to follow suit. But today China offered a helping hand. A senior Chinese official said he sees the Eurozone as a major market for investment.
Our European correspondent Stephen Beard joins us now live from London. Good morning.
STEPHEN BEARD: Hello Stacey.
VANEK SMITH: Stephen, this is the second time this week that China’s come out in support of the Eurozone. What’s going on here?
BEARD: This seems to be more about the dollar than about the Euro to be honest. The Chinese are thought to be very unhappy about the Fed printing more dollars which the Chinese believe is undermining the value of the greenback, and therefore the value of their multi-billion dollar currency reserves. The Chinese want to diversify their reserves. And that means putting more money into the Euro, the world’s number two currency.
VANEK SMITH: So will any of this actually help the Euro? What’s the feeling there in London?
BEARD: The general thinking here is that it won’t. The Eurozone’s biggest problem is government debt. Now if the Chinese were to pump a lot of their money into Portuguese, Irish, Greek, and Spanish government bonds, that would take the pressure off the Euro, but the Chinese are unlikely to do that according to Steve Barrow, currency strategist at Standard Bank.
STEVE BARROW: China clearly has to show some degree of concern that it’s throwing good money after bad in terms of buying Eurozone bonds that have been falling very significantly.
He thinks it’s far more likely that the Chinese will want to put more of their reserves into buying big stakes in industries in Europe, Something they’ve been largely prevented from doing in the United States because of American political opposition.
VANEK SMITH: Stephen Beard in London, Happy holidays, Stephen!
BEARD: And you.
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