Will China bail out the West?

With nearly $2 trillion (£1.2 trillion) worth of foreign currency reserves, China is being touted by some as the potential saviour of the Western banking system.

China's booming exports have enabled it to mass huge foreign reserves
In order to bail out ailing financial firms, Western governments need money - and China seems a good place to get that much-needed cash.
But Chinese economists say that while Beijing is ready to play its part in the rescue efforts, it will not be writing any blank cheques.
Senior Chinese officials say they are more focused on their own, internal problems, such as avoiding a domestic economic slowdown.
And any help offered by the Chinese government to solve the current financial crisis is likely to come with strings attached.
Gigantic loan?
China's burgeoning exports over recent years have helped the country build up the world's largest foreign exchange reserves.
The power equation is changing and the Chinese are pleased with this... In their eyes, this also proves that the Chinese model is working
Willy Lam Chinese University of Hong Kong
Figures released this week show these reserves now total $1.9 trillion.
Writing in the Financial Times, US-based economist Arvind Subramanian suggests the US could borrow some of this money.
"The Chinese government could offer to lend up to $500bn to the US government for the rescue of its financial sector," wrote Mr Subramanian, of the Peterson Institute for International Economics.
In fact the Chinese have already been doing something similar for a number of years. Beijing has been buying up US government debt, which has allowed the US to spend beyond its means.
"China is already helping the US economy and, if possible, it will continue to do this," said Zhao Xijun, of Beijing's Remin University of China.
Shared burden
But Mr Zhao, deputy dean of his university's school of finance, made it clear that China alone could not solve all the world's financial problems.
Other emerging economies, such as Russia, India and Brazil, will also have to help, he said.
"It's not sufficient for emerging economies or developed countries to do this on their own. They must get together," added Mr Zhao.
And even though China might have the money to help out, it is not certain that there is the political will to put the world's financial crisis at the top of the agenda.
Chinese leaders have already indicated that they believe Western governments should clean up their own financial problems

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