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But millions of jobs still depend on manufacturing, especially along the southeast coast, where thousands of factories supply Europe and the United States with low-cost shoes, toys, furniture and other goods. "There will be joblessness, loss of consumption power for a part of the population that has just come out of poverty. There will probably be a fair amount of social unrest that comes along with that," said Guthrie. On top of interest rate cuts and lower bank reserves to spur lending and backstop growth, it's likely China would slow the appreciation of the tightly controlled yuan to keep its exports competitive on world markets. That would be even more the case if especially fragile countries that use the euro such as Portugal and Greece ditch it in favor of a weak, export-boosting national currency. That in turn would raise the risk of bigger economies such as Italy doing the same. A splintering of the euro grouping would send the common currency plummeting while acting as jet fuel for other currencies such as the dollar and the yuan, which is also known as the renminbi. "We suspect that Chinese policymakers will respond by slowing the renminbi's pace of appreciation to a crawl," said Mark Williams, chief Asia economist for Capital Economics. Some see the crisis as an opportunity for China's leaders to raise their global clout by stepping in to shore up the world financial system. But over the weekend they sent their clearest signal yet that they intend to stay out of the fray. A senior diplomat rejected the idea that China's $3.2 trillion in foreign currency reserves could be used to help dig Europe out of its mountain of debt. "The argument that China should rescue Europe does not stand, as reserves are not managed that way," Vice Foreign Minister Fu Ying said in remarks reported on the weekend by Chinese state media. Fu said China's reserves -- some of which are invested in the bonds of European governments
-- are akin to money in a savings account. The idea of a possible Chinese role in Europe has caused unease among Europeans. It wouldn't come off well at home either, analysts said. "It doesn't make sense for China to give money from a relatively poor population, on average, to Europeans who don't want to cut their lifestyle," said Dariusz Kowalczyk, a senior economist at Credit Agricole CIB. "This kind of logic will be deeply unpopular domestically, and I don't think China will make such moves. They will show some gesture of support because they want to be seen as a player on the global scene."
[Associated
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