Europe's efforts to solve its debt troubles won a vote of confidence Friday from the chairman of China's sovereign wealth fund, but Germany's finance minister told an international conference that the continent can't afford to become complacent.
Three years since the crisis started in Greece, the 17 European Union countries that use the euro have made a hopeful start to 2013, with promising economic data and troubled countries such as Italy and Spain enjoying lower borrowing costs.
Europe's problems and its slow-moving, complicated decision-making have often aroused frustration from other global economic powers.
Still, Jin Liqun, chairman of the board of supervisors at the China Investment Corp. and a past critic of rigid European labor laws, said there's reason for optimism.
"Now we finally see that the European countries are really coming to grips with these issues," he told the Munich Security Conference, an annual gathering of leading security and foreign-policy officials.
He said the "mainstream" of the European public is behind tough austerity measures despite frequent protests. "We should understand (that) when you cut out some of the jobs, new jobs will be created," he said, insisting that "we have to continue with the austerity programs."
A similar message came from German Finance Minister Wolfgang Schaeuble, whose country has championed the often-criticized focus on budget-cutting to tackle the crisis.
"The euro crisis is not over, but we are in a much better position than a year ago," said Schaeuble, speaking before Jin. He insisted "it would be completely wrong to sit back because of a certain easing of tensions," and Europe must ensure this year it doesn't forget the need to improve its economic competitiveness.
"We are always in danger of forgetting straight away to draw the lessons we have decided to implement, such as stronger regulation of financial markets, if we have less pressure in the markets," Schaeuble added.
Heavily indebted countries such as Spain and Italy faced alarmingly high borrowing costs on bond markets in mid-2012 as investors wondered whether they would be able to keep paying their debts.
Those costs fell after several steps by European leaders. One was the European Central Bank's offer to purchase bonds issued by indebted countries if they promise to reduce their deficits. Another was a proposal to set up a so-called banking union that aims to prevent failed banks bankrupting any country by transferring supervision of bank behavior to a single, central supervisor based at the ECB.
"As recently as last July, Italian and Spanish default probabilities as implied by the market were nearly 50 percent and that's a terrifying place to have been," said Anshu Jain, the co-CEO of Deutsche Bank, Germany's biggest lender and a global heavyweight. Even the current rate of 20 percent "is still very much a worry," Jain said.
Jain said Europe now needs to work on reforming pension systems and labor markets, and making many professions easier to enter. His bank forecasts economic growth in Asia over the next decade of 124 percent, compared with 33 percent in the U.S. and a relatively feeble 17 percent in Europe.
"Thank God the acute phase of the crisis is over, because we were flirting with the edge of the precipice for entirely too long," Jain said. "But I think we need to take this new cohesion we have in Europe and really dedicate it toward make Europe dynamic again."
The president of Lithuania, an EU member that doesn't use the euro and pushed through painful reforms following the global economic crisis, bluntly criticized Europe's tendency to spend time dreaming up "creative accounting instruments which later nobody uses" to calm markets.
"If there is a problem you need to do — not talk, not ask for solidarity from somebody," Dalia Grybauskaite said.
© Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.