Interview
GENEVA – The managing director of the eurozone bailout fund, the European Stability Mechanism (ESM), told Xinhua in an interview on Monday he was positive about the outlook for China’s economy in 2024 and that an increase in trade between China and Europe will have a positive impact on global growth.
“We are at a time when it’s important to try to do everything to strengthen bilateral relations between China and the European Union, and in particular, with the European Stability Mechanism,” Pierre Gramegna said in an online interview. Last month was the first time he visited Beijing since 2019.
“We had very fruitful meetings with the Ministry of Finance, the People’s Bank of China, and Chinese investors in our ESM bonds. We also had a meeting with Asian Infrastructure Investment Bank (AIIB) President Jin Liqun.”
The ESM is the permanent crisis resolution mechanism for the countries of the eurozone. Like its predecessor, the temporary European Financial Stability Facility (EFSF), it provides financial assistance to eurozone member states experiencing or threatened by financing difficulties.
“We have a cooperation agreement with the AIIB, which will come to an end soon and which we have decided to renew and enhance. This reinforces financial stability both in Asia and in Europe,” Gramegna said.
ECONOMIC OUTLOOK
Last month, the International Monetary Fund (IMF) said that China’s real gross domestic product (GDP) is projected to grow by 5.4 percent in 2023.
“Five percent growth is obviously higher than the respective figure in Europe. It is less than a decade ago, but China has become a mature economy and 5 percent growth this year, and probably next year also, is quite encouraging,” he said.
Gramegna also said that “the fact that Europe has been able to avoid a recession in 2023 is quite remarkable” as the bloc’s economy has been “very resilient in the context of the permanent crisis we have been experiencing since 2020.”
“If Europe and China continue to try to even out the discussion on trade, we can count on more trade between China and Europe,” he noted.
“China and Europe are world champions in exports, and this contribution to world trade would be extremely important because it has a positive spillover effect on all economies in the world,” he said.
INVESTMENTS FROM CHINA
Based in Luxembourg, the ESM has been operating since October 8, 2012. It raises funds by issuing capital market instruments. The ESM is the sole mechanism for responding to new requests for financial assistance by the eurozone member states.
The initial rescue fund for the eurozone following the global financial crisis of 2008, the EFSF, provided loans to Ireland, Portugal and Greece.
“We’ve had a very positive and long relationship with investors in Asia, in particular with China. Chinese investors have been present in our portfolio and have been investing in the ESM since the very beginning in 2011 in the provisional EFSF and then later in the institutional ESM,” Gramegna explained.
According to Gramegna, the current investor base of the ESM includes 13 percent from Asia, with a significant portion originating from China.
“The ESM itself also invests in China, so we are in fact mutually supporting ourselves because we have the same goal,” he added. – Xinhua
