Viewed from China, the management of the eurozone debt crisis offers a stark contrast to the handling of the 1997-98 east Asian crisis. In that episode, Thailand, South Korea and Indonesia were all forced to implement tough austerity programmes imposed by the International Monetary Fund. But these countries also lost no time in restructuring their economies. Within about three years, their economies were back on track. This serves as both a warning and a lesson to the eurozone.
Unlike many of today’s Europeans, the people of east Asia did not have the luxury of large relief funds from outside their countries. The people had to tolerate hardship, and they did not believe in the magic of street demonstrations. In a poignant case, the Korean people contributed gold and household foreign exchanges to the government to help ease fiscal pressure. China made a commitment not to devalue its currency. Politicians took action rather than indulged in endless debates.
Clearly this has not been the case in Europe. The Greek and Spanish crises have not been seen as shared challenges. They have marched to discordant national anthems. Endless bargaining on terms and conditions for piecemeal bailouts has wasted a lot of time, each summit only reinforcing the belief that the eurozone is stuck in a cul-de-sac. This approach is anathema to a Chinese mindset: in The Art of War, Sun Tzu advocated setting fire to ships behind battling troops. Sometimes no way back is the best reason to fight for survival.