Had Spain received a bail out from the IMF or the Eurozone, they would have had major austerity measures imposed on them and the public unions would have been forced to make major concessions before receiving the money. So what does Spain's prime minister do? He avoids responsibility and hits up China for the money. Meanwhile, Spain's economy is headed down the crapper at an accelerated rate. But he doesn't care. He's living for the moment. Afterall, he doesn't want to piss off his public sector union voters. Oh and China comes out of this deal smelling sweet!
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The Wall Street Journal
written by Jean Yung
January 6, 2011
MADRID—Chinese Vice Premier Li Keqiang Wednesday reiterated Beijing's pledge to support Spain in a meeting with the country's prime minister, José Luis Rodríguez Zapatero, as the two countries began signing $7.3 billion in deals.
Mr. Li, widely expected to become China's next premier within the next two years, told Mr. Zapatero that China wanted a united, strong and stable Europe, with Spain an important player in multilateral international relations.
"China is a long-term and responsible investor in the Spanish and European financial markets, and it has confidence and great interest in the Spanish market," Mr. Li said on the second day of a nine-day tour of the European Union in a show of support for China's largest export market.
The contracts cover 16 sectors, including energy, banking, telecommunications, transport and agriculture, but by far the most valuable one was the sealing of a previously announced $7.1 billion acquisition of certain Brazilian assets of Spanish oil firm Repsol YPF SA by China Petroleum & Chemical Corp., or Sinopec.
Repsol said in a statement Tuesday that the two companies pledged to analyze new business opportunities world-wide. Spain's Industry Ministry also said Wednesday that Spain and China will "strengthen their relationship" in the energy sector and collaborate on foreign investments.
Mr. Li said Beijing would welcome Spanish financial companies launching operations in China. Spain's second largest bank, Banco Bilbao Vizcaya Argentaria SA, signed a co-operation agreement for Latin America with China Development Bank, BBVA said Wednesday. The two hope to work together in project finance, commercial services, derivatives and corporate banking, the Spanish lender said. BBVA is the largest Spanish investor in China, where it has a 15% stake in China Citic Bank Corp.
Among other contracts to be signed were deals for China to purchase $13.5 million of meat products, $9 million of olive oil, $6 million of wine and $260,000 of ham from Spain, the state-run Xinhua News Agency reported.
Mr. Li said China will likely purchase more Spanish government bonds depending on market conditions after a meeting Tuesday with Spanish Economy and Finance Minister Elena Salgado, Xinhua reported earlier. China is one of the biggest owners of Spain's sovereign debt, holding around 10% of the total.
Mr. Li's comments come as China aims to strengthen ties with the EU, its biggest trading partner, and amid continued pressure from Washington, which is urging Beijing to let the yuan appreciate faster to reduce the trade imbalance with the U.S., China's next-largest trade partner.
China is keen to diversify more of its massive foreign-exchange reserves—at more than $2.6 trillion, the world's largest—away from U.S. dollar-denominated assets.
In December, Portuguese newspaper Jornal de Negócios reported that China would invest between €4 billion ($5.32 billion) and €5 billion in Portuguese bonds to help Portugal refinance €15 billion of debt due to expire before April.
China has expressed its support for countries including Portugal and Greece, but has yet to confirm any details of its bond purchases. Spain is the first stop on Mr. Li's visit to Europe, which will include visits to Germany and the U.K.
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