It is still too early to tell whether the current European debt crisis will be seen as the second half of the 2008 financial crisis, or whether it will become the start of a new global economic slowdown.

It is presumptuous to say that the debt crisis will come to an end anytime soon.

Several years of adjustments, including capital injection bailouts, have not resolved the crisis and have instead sewn harmful seeds for the future.

Zhu Min, Deputy Managing Director of the International Monetary Fund, recently said that "the deep-rooted cause of the crisis is that all bailout plans since 2008 paid much attention to liquidity and neglected forceful structural reforms." The debt crisis is now spreading to banks in Europe , Zhu said.

Recently US president Barack Obama and French president Nicholas Sarkozy proposed that the yuan should be included in the International Monetary Fund's Special Drawing Rights system.

When the crisis first broke out, the U.S. and the Euro zone proposed policies aimed at adjusting an unbalanced world economy. However, to a large degree, their only aim was to obtain bailouts that would help restore their previous economic positions. They hoped that emerging economies, especially China, could lift the world economy out of the mire.

Data provided by the Chinese Academy of Social Sciences shows that China's economy accounts for only 9.5 percent of the world's total. In contrast, the economy of the US, Europe, and Japan comprise 60 percent of the world's GDP.

The world's global economic problems cannot be solved by any single country. With over $3 trillion U.S. dollars in foreign reserves, China cannot act as a sole rescuer of the global economy.

Foreign reserves have helped China to sustain rapid growth amid the financial crisis. But these reserves are a double-edged sword. When China purchased U.S. bonds, American officials promised that the U.S. debt would not default. But few months ago, the U.S. revealed that its debt might default without Congressional action. The threat of default and subsequent battle in Congress to honor U.S. debt obligations served a warning that China should diversify its foreign exchange reserves and adjust its investment strategies to meet unexpected challenges.

At the onset of the financial crisis, China decided to invest 4 trillion yuan to increase domestic demand and relieve the global economic pressure. China played a positive role in global economic recovery following the crisis. Now, China should pay attention to the European debt crisis and take precautions to safeguard its investments.

(This article was first published in Chinese and translated by Zhang Ming'ai.)

Opinion articles reflect the views of their authors, not necessarily those of China.org.cn.

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