“The euro debt crisis has now been going for nearly two years since the end of 2009, and the sovereign debt crisis has spread like the Black Death of the 14th century across the euro zone countries.”
The above quote comes from Zhang Zhixiang, a former head of the People’s Bank of China international department, and Zhang Chao, an economist for the China Development Bank.
In an article for the People’s Daily, the top newspaper of China’s ruling Communist Party, the two former Chinese officials wrote an extensive piece in which they contended that “the euro debt crisis will lead to a decline in real demand that will have a far-reaching impact on our country’s real economy.”
However, they also noted that “The spread of the euro debt crisis will not have as large an impact on our country’s foreign exchange reserves as the U.S. sovereign debt downgrade, because euro assets make up far less of our country’s foreign exchange reserves than the dollar.”
The former Chinese officials’ commentary came days before a scheduled meeting between French President Nicolas Sarkozy and Chinese President Hu Jintao in Beijing. There, the two leaders will hold discussions focused on the recent turmoil in financial markets across the globe, according to Reuters.