Its the Year of the Dragon and Angela Merkel is off to Beijing. It is traditional at this time of year to give Ang Poh (a red packet) filled with money to those less well off. So who will receive the fattest cheque?
Merkel’s mission is to convince Mr Hu to forgive Greece its debts and participate in the Debt Swap. This is worth about USD 15B. China, on the other hand, would benefit from the cancellation of Europe’s trade embargoes on cheap shoes etc. Over time this could be worth much more…
…well, fat chance! The Chinese are fuming over the debt debacle and if they give USD 15B now they may be called upon for USD 100B in the future if Italy, Spain etc decide to look East for relief. Europe meanwhile needs to protect wages and votes.
My prediction is that Merkel will be welcomed with a dragon dance and a cup of tea but the Ang Poh will stay firmly inside Mr Hu’s pocket.