Edited By John Ryan
China needs to diversify out of the Dollar and it is this monetary policy that will fundamentally change the global currency scenario. China has been supportive of the Euro since its creation and is also lending support to the IMF’s special drawing rights. At the same time, Chinese policy targets the internationalisation of the Renminbi and with that the creation of a multi-polar monetary order.
4 The Battle for the Euro! China’s (Information) Strategy to Steer Market Sentiment in Favour of the Single Currency
In the age of information, media outlets have considerable influence in shaping public perceptions. This is especially true in highly interconnected financial markets where instant information can suddenly change investment decisions. Throughout the Eurozone sovereign debt crisis, European policymakers have blamed the Anglo-American press for scaremongering over the faith of the Euro. The possibility of a Euro break-up has been constant news in the openly Euro-sceptic British tabloids but also in the editorially more balanced Financial Times, The Economist, The New York Times and the Wall Street Journal. By contrast, the Chinese Government and its associated agency Xinhua have had a very different approach. Every time the Euro has fallen into a danger zone, the Chinese leadership has counterbalanced widespread Euro-scepticism by propping up the single currency. It has been widely publicised that China has supported the Eurozone with tangible investments in debt bonds of troubled Eurozone countries. However, what has been overlooked by the literature in International Relations and International Political Economy is how China has also developed a carefully designed communication strategy to steer market sentiment in favour of the Euro. While covering China’s financial support to the Eurozone, this chapter will also focus on this less studied informational support. By matching Chinese public (media and official) statements of support with the foreign exchange rate trajectory of the Euro, it will be demonstrated that China has had great influence in sustaining the value of the European currency. ← 97 | 98 →
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