China solution for Greece?

A prominent economist says China's banks are circling debt-stricken countries like Greece, offering an alternative to the brutal austerity measures proposed by the International Monetary Fund and European Union.

Former adviser to the IMF and the World Bank, John Perkins, told the ABC's The Business that China's Asian Infrastructure Investment Bank (AIIB) and the BRICS bank were courting countries like Greece.

Mr Perkins said he believed China had sent people to Greece to offer an alternative bailout deal.

"If I were the finance minister running the system I would seriously be looking at that alternative. I think that the Chinese are presenting a competitive edge here," he said.

Mr Perkins revealed in his international bestseller, Confessions of an Economic Hit Man, how international organisations like the IMF and the World Bank enslave countries like Greece by offering crippling and unsustainable loans which never deliver the economic growth they promise.

He said he believed Greece and the other European countries in similar positions should turn to China as a means of breaking the debt spiral.

"These austerity programs are not the right program, even the IMF said recently there has to be more debt forgiveness we have to readjust the debt and the Europeans don't seem willing to do this," he said.

Mr Perkins was surprised by the IMF's public criticism of the eurozone's bailout deal this week and said it shows the growing influence of China's banks.

"I think the motivation may have been the Chinese because the Chinese have stepped in before, in Ecuador and several other countries, and we now have these very powerful banks that the Chinese are heading up," he said. 

Australia joined the AIIB this year which attracted criticism from US institutions.

China trusted 'more than the US'

Mr Perkins said the growing strength of the banks will result in a major shift of power away from the United States and European Union.

He conceded that there is nothing to stop China from becoming another "economic hit man" but said the Chinese have a good record so far, particularly in South American countries like Ecuador.

"I recently met with a minister of Ecuador - and he said ultimately that he has no idea what China will do but we do know that the IMF, the World Bank, the Europeans' and the US have screwed us over," he said.

"They've put military bases around here and threatened us and China hasn't done that, so right now we trust China more than the US."