Despite mutual courting and encouraging words from both sides, trials lie ahead of China if it is to ride to the rescue as the debt-ridden EU's knight in shining armor.

Jonas Parello-Plesner, a senior research fellow at the European Council on Foreign Relations, gave his views on the subject when he spoke at a recent panel discussion hosted by the Embassy of Denmark in Beijing on March 1. The panel explored the roles and stances of emerging powers amidst the financial turmoil currently engulfing Europe. Parello-Plesner commented that China has many incentives to help solve the EU sovereign debt crisis. However, he cautioned that it also faces various dilemmas.

"China has a great interest in seeing the euro crisis recede, with Europe being its largest export destination," said Parello-Plesner.

He continued: "China is also trying to move beyond [the U.S.] dollars in its currency intake, and the world without the euro would of course return to a dollar-dominated world. In that sense it's not in China's interest either."

Despite this, top Chinese officials have consistently given the EU what Parello-Plesner described as "very verbal" commitments. Meanwhile, China's business leaders and financial policymakers have maintained a stance of "the EU must do more to help itself before China can help it."

Beyond China reluctance to set foot in murky waters – where it was bitten in 2007 when Chinese bankers invested in Wall Street just before the market crash – Parello-Plesner attributed the uncertainty to increasing public awareness of the issue.

"The Chinese public often describes [the country's] currency reserves as the blood and sweat of the people, asking, at a time when the middle class is struggling with inflation that is not completely under control and feeling price rises: 'Why should we use money on lazy Europeans?'"

Such a problem can be solved by better public relations efforts. Perhaps a more critical problem, though, is the timing for how China's foreign reserves are used in 2012. Parello-Plesner described China's potential contribution to addressing the euro zone crisis as a "tight balancing act": On the one hand, it wants to support its biggest trading partner; on the other, its reserves could play a role in maintaining financial stability through its banks during a year of transition among the country's top leadership.

Parello-Plesner added that the subtle confusion of both sides was exacerbating an already complicated situation. China is unsure as to whether negotiations are more effective and authoritative when conducted through the EU-China summit or directly with such influential figures as Angela Merkel, chancellor of Germany, which is China's most valued customer among EU member states.

In the meantime, there are not yet euro bonds similar to U.S. Treasury bonds, and its debt market is held by individual member states. This makes it hard both for China to take a stake in a common debt market, as well as for the EU to track the amount of its debt already purchased by China.

Nevertheless, Parello-Plesner said this particular difficulty may ultimately prove to be moot, as China prefers to invest in European companies rather than government bonds. He also used the diversity of its debt market to quench fears of China's political influence in the European Union. However, even with a single entity such as China's debtor in the U.S., the European Council economist said: "Nobody would say that American foreign policies are made in Beijing."

As negotiations crawled, with China only recently starting to give a clearer commitment to supporting the European Rescue Fund and the European Financial Stability Facility, one silver lining has not escaped the eyes of EU leaders.

China has kept things businesslike and refrained from making the issue personal.

Denmark's Ambassador to China, Friis Arne Petersen, who also sat on the panel, said that although value differences remain the biggest obstacles for EU-China relations, they have become separate issues from economic discussions between the two parties.

"Lately – [during] the last one-half year or one year – Chinese leaders have not tried to combine or link market economy status or some of the other issues based on value differences because of increased economic cooperation or other important growth in our cooperation," said Petersen. "I think that's a good sign, a natural development in our relationship."

Echoing the ambassador's comments, Deputy Head of the EU Delegation to China, Carmen Cano de Lasala, called the current EU-China relationship "mature, [to the point] where we can talk about these differences."

EU officials continue to lobby China to contribute more in helping to solve the EU sovereign debt crisis. At the mid-February EU-China summit, European Commission President Jose Manuel Barroso and European Council President Herman Van Rompuy met with President Hu Jintao and focused discussions on economic issues. While MES and human rights were briefly mentioned, the resulting joint communiqué was dominated by agreements on economic partnership and mutual investment opportunities.

De Lasala stated that the EU leaders "welcome the positive attitude" shown at the summit and commented on the opportunities available to both sides if the debt crisis can be resolved.

"What happens to Europe has an impact in China," she said. "We trade 1 billion euro every day between China and the European Union. So we don't see China as a threat; we see China as an opportunity."

The top delegate said she hoped that China could, in turn, recognize the benefits of helping the EU resolve its debts.

"We are putting our house in order. We are in a globalized world, and no economy can advance its problems in isolation. The crisis has shown that we are very much interdependent."