October 5th, 2010
07:18 AM GMT
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(CNN) – The visit of Chinese Premier Wen Jiabao to Greece was a welcome shot in the arm just before Athens rolled out its 2011 budget.

Greece, the poster-child for the wave of austerity sweeping the European Union, must claw back its budget deficit in the wake of a nearly $150 billion bailout earlier this year. Wen pledged $5 billion in financing for the Greek shipping industry and vowed to continue to buy Greek debt bonds.

Greece finds a friend in China?

But the love in Athens isn’t expected to last in Brussels, where the China-European Union summit starts on Wednesday. The EU has the uphill task of trying to convince China to let the value of its currency rise.

Wen’s position on the topic was made clear Monday at a speech opening the Asia-Europe Meeting ahead of the EU summit.

"We should intensify macroeconomic policy coordination, manage with caution the timing and pace of an exit strategy from economic stimulus, and keep the exchange rates of major reserve currencies relatively stable," Wen said.

Collectively, the European Union is Beijing’s largest trading partner; China exported $293 billion to Europe in 2009. Appreciation of the yuan would undercut profits of Chinese products sold in the EU and hamper China’s growth, which government officials say needs to hover near 8 percent a year to maintain employment.

The Eurozone finance minister’s group – like lawmakers in the U.S. – say China’s currency is undervalued. Fresh in the minds of the EU is the precipitous drop  of the euro in the wake of the sovereign debt crisis triggered by Greece.

On one hand, Greece and other nations are looking to China for investment and support of Eurozone bond markets. On the other hand, European exports are being hit by a weak yuan.  The dance between economic courtship and currency hardball will be interesting to watch as Wen continues his weeklong visit to Europe and Turkey.



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