China's Worries About European Economic Turmoil

Chinese Premier Wen Jiabao recently completed a trip to Hungary, the United Kingdom and Germany with billions in business deals and much talk of confidence in the European recovery and China's ability to restrain inflation and maintain strong growth. Fortunately for China, exports to the United States and Europe are holding up amid a weak global recovery. But with inflation peaking, threats to growth rising and a rocky social situation in China — similar to the one China found itself in leading up to the 1989 unrest — the last thing Beijing needs is for European demand for Chinese exports to dive.