SALDI! ¡Rebajas! The winter sales have started. And like the increasingly numerous Chinese tourists across Europe, the Chinese state has gone shopping. On his tour of Europe this month, China's vice-premier, Li Keqiang, announced his country's plan to buy cheap European government bonds, as Chinese companies purchased shares in European petrochemical ventures, tens of thousands of cars and even a few million euros' worth of Spanish wine and ham to top off the shopping basket.

This is not just nouveau-riche retail therapy. China is looking for bargains. But some of the things it is seeking to spend its money on are less tangible: goodwill, political support and, perhaps most importantly, the survival of the euro zone. In recent months Chinese leaders have visited not just the big European countries, such as Germany, France and Britain, but also several of the troubled “peripheral” states. With every trip to the southern fringe—be it Wen Jiabao, the prime minister, in Greece in October; President Hu Jintao in Portugal in November; or Mr Li in Spain this month—the leadership brings the same message: China supports European integration, wants the euro to flourish and will buy bonds to help the most indebted states.

Writing in El País, Mr Li held out the prospect of “colossal” business opportunities for Spain: “If each of the 1,300 million Chinese people consumed a bottle of olive oil or enjoyed a few glasses of wine, all of Spain's annual production would probably not be sufficient to meet the demand.” The newspaper reported that Spain had greeted Mr Li as a “new Mr Marshall”, an allusion to the American secretary of state who gave his name to the post-war reconstruction programme in Europe. Last October the Italian authorities put up Chinese lanterns and bathed Rome's Colosseum in communist red light to welcome Mr Wen. It is a sign of how fast China is rising, and how quickly Europe has fallen behind, that European leaders should cling for salvation to a country that, however big, has an economy one-third the size of the European Union's.

China has good reason to help Europe, its biggest export market and an important source of technology and know-how. Buying European bonds helps to shore up China's vital market, stop the slide of the euro that would make China's exports more expensive, protect Chinese euro-denominated assets and diversify Chinese reserves away from dollars. Still, the scale of Chinese bond-buying is unclear; certainly, it has not been enough to assuage the panic in the markets. Bond yields for Europe's periphery remain worryingly high despite the bail-outs of Greece and Ireland. Portugal may well be next (see article).

Nor is it obvious that China's money is helping to buy European sympathy. An attempt by Catherine Ashton, the EU's foreign-affairs chief, to reopen the debate on lifting the arms embargo imposed on China after the 1989 Tiananmen Square massacre seems to have come to nothing. And although Mr Li hailed Spain as China's “best friend” in Europe during his visit, Madrid still sent its ambassador to last month's Nobel peace prize ceremony in Oslo honouring Liu Xiaobo, a jailed Chinese dissident, as did every other EU country with an ambassador in Norway.

If anything, there has been a marked sharpening of Europe's tone towards China over economic issues: the value of the yuan, European firms' access to the Chinese market, restrictions on the export of rare-earth minerals essential to high-tech industries and China's acquisition of western intellectual property, by fair means or foul. In France spooks have been called in to investigate whether China was behind the espionage that targeted Renault's electric-car technology. Europe and America are both boosting their cyber-defences in large part because of the vast scale of suspected Chinese electronic snooping.

Even a largely pro-market body like the European Commission, which regards abolishing trade barriers inside Europe as a sacred task, is starting to make protectionist noises about China. Antonio Tajani, the industry commissioner, has called for the EU to vet foreign investments that may “represent a danger”. This was prompted by the (failed) attempt by a shadowy Chinese company to take over a Dutch maker of fibre-optic cables. The trade commissioner, Karel De Gucht, is preparing possible retaliatory measures against China if it does not open up more of its government contracts to European bidders. One reason for this was Poland's decision to award a Chinese firm a contract to build a section of a motorway part-funded by the EU.

Whether either of these measures is implemented will depend on the balance of power between free-trading “northern” countries and more protectionist “southern” states. Opinion is shifting, however. Last September European leaders agreed that relations with China should be based on “reciprocity”.

Size matters

For Europe, the rise of China is exacerbating its own decline. Until recently the economic debate turned on whether Europe could keep up with America; now it is whether it can stay ahead of China. “Beyond a certain size, China is disturbing,” says one Eurocrat. It not only threatens Europe's low-end manufacturers of shoes and textiles but is quickly moving into making cars, trains and, perhaps soon, planes. Yes, the Chinese love BMWs and Gucci bags. But can Europe survive on high-spec and luxury goods—Switzerland on a continental scale?

The EU is surely right to demand reciprocity, but it must be the right sort. Starting a tit-for-tat trade war would leave Europe worse off: consumers would pay higher prices, taxpayers would suffer and firms would lose markets. What Europe needs is more open markets and clearer rules. For China, too, these would be a better buy than dodgy bonds.





Economist.com/blogs/charlemagne