Audio Transcript:

Marco Werman: I'm Marco Werman. This is The World. Much of Europe looks to Germany to help pay the bills, but many there dream that China will swoop in and solve the Eurozone's debt crisis. Today, German chancellor Angela Merkel went to China to discuss Europe's financial woes, and she's apparently asking China to contribute to a bailout fund. The World's Mary Kay Magistad is in Beijing. What is China's response to this request, Mary Kay?

Mary Kay Magistad: Well, today Angela Merkel met with Premier Wen Jiabao, and he did call the European debt crisis urgent, and said that China is considering more participation in helping to resolve it, possibly by contributing to the bailout fund for the euro. This is new. Up until now Chinese leaders have been saying you know, we're very interested in Europe getting out of the debt crisis, it's important to us. Europe as a whole is China's biggest trading partner. And over the past year trade has fallen off because of the economic crisis. What seems to have changed is that the Chinese government has recognized that if it doesn't step in this could drag on a lot longer than is comfortable for its economy.

Werman: So it's kind of self protection. Is there anything else in it for China?

Magistad: Certainly good will, but in the past that hasn't been high on China's list for reasons why it would spend billions of dollars or invest billions of dollars somewhere else. There was a lot of push back back in the autumn when China was getting pressure, getting asked from Europe you know, could you help out? A lot of Chinese were saying online, why would you do that? You know, we need money for schools. We need money for better hospitals. We need money for all kinds of things here, why would you be putting China's money elsewhere? And the government could come back and say you know, one way that we have money to spend on things like schools, and hospitals and so forth is we trade with other countries. And if those countries go down it's gonna hurt us too.

Werman: Will that be enough to keep the Chinese people quiet?

Magistad: Hard to know. The Chinese people haven't been very quiet lately. There are 500 million of them online now and they're very vocal these days.

Werman: What does China make of suddenly being perceived as this white knight being able to come to the rescue of countries in Europe?

Magistad: I don't think China sees itself as a white knight, and if anything, instead of throwing up its hands and saying "Whoa, that's not our role; our role is to look for good places to put our money, good investments for us to make for our purposes; and we think you guys should get your house in order because it's good for you and it's good for us. But you know, if we invest in you it's because we see benefit for ourselves. We're not doing this out of charity."

Werman: Has anybody in China discussed a worst case scenario in which a big global session happens and where China might find itself it that were the case?

Magistad: Well, I think going back to 2008, a lot of Chinese analysts were looking at worst case scenarios, and that was why there was a big infusion of cash from the government in stimulus spending. Now, the government feels that it actually has a bit of breathing room to be able to slow down you know, white hot economic growth, and think more about the quality of growth, recognizing that it can't keep putting so much money into infrastructure and into real estate, which is what was driving growth. It needs to be thinking about ways of increasing domestic consumption, and that means fundamentally changing the structure if the economy, including having more of a social safety net for ordinary Chinese citizens.

Werman: Let me ask you this, Mary Kay, just to go back. Merkel also apparently asked China to use its influence with Iran on its nuclear program. How did that go over?

Magistad: Yeah, she said that she'd like to see China persuade Iran to give up its nuclear weapons program. And Wen probably listened politely, but later told Chinese journalists that China objects to Western nations politicizing what he called the normal commercial relationship China has with Iran. What he was referring to is that China imports about 11% of its crude oil from Iran, that makes it China's third biggest supplier of crude oil. And China opposes sanctions and really doesn't want to get involved in that way. If anything, it's gonna use its clout to try to make sure that there isn't too much pressure on Iran.

Werman: The World's Beijing correspondent, Mary Kay Magistad. Always good to speak, thanks.

Magistad: Thank you.