Top official at China’s £300bn sovereign wealth fund said that the depth of public anger in the eurozone could lead to a ‘complete discarding’ of austerity programmes
- guardian.co.uk, Friday 16 November 2012 13.44 EST
Opposition to Europe‘s austerity programmes intensified on Friday as a top official at China’s £300bn sovereign wealth fund warned that the public are at “breaking point” and protesters demonstrated in solidarity against the International Monetary Fund in Manila.
Jin Liqun, chair of the supervisory board of the China Investment Corporation (CIC), said that undue harshness risked a backlash which could end with necessary economic reforms being abandoned. Jin, who has previously argued that Europeans should work harder, repeated an earlier warning that governments had spent unsustainably in the past and need to be more fiscally responsible, but added that the depth of public anger could lead to a “complete discarding” of austerity programmes.
“The fact the public are taking to the streets and resorting to violence indicates the general public’s tolerance has hit its limits,” he said.
“Unions are now involved in organised protests; demonstrations and strikes. It smacks of the 1930s,” he said.
“The general public’s tolerance of austerity has been stretched to breaking point.”
Speaking to the Guardian, Jin said the key was to balance fiscal cutbacks with growth strategies. “So there should be some tolerance, but the determination to carry on austerity should not be relaxed.”
Jin’s comments came two days after the eurozone saw the biggest anti-austerity protests since the financial crisis began, with riot police clashing with demonstrators in several cities.
Christine Lagarde, the IMF managing director, received a taste of the global concern over the eurozone during a trip to the Philippines. Protesters gathered in Manila dressed as zombies, carrying placards bearing slogans including “IMF is an economic zombie” and “IMF is dead. A walking dead”.
Plastered with fake blood, the group lay down on the road outside the presidential palace and said they were acting in solidarity with the people of Europe,
The euro crisis overshadowed Lagarde’s trip – which is already being truncated so she can return to Europe for another meeting of finance ministers next Tuesday. The IMF managing director said it was essential that the eurozone agrees a way to put Greece on a sustainable debt path.
“It is not over until the fat lady sings, as the saying goes,” Lagarde told a press briefing. “It is a question of working hard, putting our mind to it, making sure that we focus on the same objective which is that the country in particular.”
Gary Jenkins, analyst at Swordfish Research, predicted that the IMF and the eurozone will agree a deal to give Greece its next slice of funding, after failing to reach agreement last Monday.
“The alternative is to risk a disorderly default and a potential meltdown of the eurozone,” Jenkins added.
The latest trade data showed a drop in goods being brought into the eurozone, a day after it fell into recession. Imports fell 4% in September while exports rose by 1%, resulting in a euro area trade surplus of €9.8bn (£7.8bn) in September, up from just €1.7bn a year ago.