HOW the mighty are fallen.

A little over 10 years ago the Eurozone seemed to represent the brave new world, a conglomeration of 17 European countries supporting a common integrated currency that would challenge the American dollar and create a mighty economic powerhouse in the heartlands of continental Europe. Those on the outside looking in, such as the UK, wondered if they had done the right thing by not adopting the common currency. Now they may be counting their lucky stars.

As the European debt crisis rumbles on, despite hastily patched-up deals and 14 summits, the Eurozone’s leaders are as far away as ever from finding a lasting solution.

Instead of tackling the underlying problems that have beset their currency they find themselves running around attempting to deal with a multitude of disparate symptoms. Greece has almost been given up as a lost cause as the rot spreads inexorably into Italy, Europe’s third-largest financial market. There is still no saying where it will all end.

The crisis has also become a global phenomenon. Last Thursday, as the markets plummeted in the face of Greek and Italian decline, the US dollar ended up at an all-time low against the euro. With interest rates falling, thoughts in Washington turned again to the quick-fix solution of quantitative easing to help stop the rot.

Some idea of the extent of US nervousness came when President Barack Obama called on European leaders to create a “firewall” to stop the contagion spreading and to give the banks an even chance of making up lost ground.

With the dollar unable to bring its traditional strengths to prop up the world economy other players have emerged, most notably China. With a war chest of some £2 trillion in financial reserves, it has the deep pockets to emerge as an unlikely saviour.

The thinking is straightforward. China has loads of spare cash while Europe is desperate for it and it makes sense for European leaders to try to persuade Beijing to make a major investment in its expanded European Financial Stability Facility (EFSF). This is the recently created body that will raise the funds through bonds to provide loans to embattled countries within the Eurozone, but it is still desperately short of the necessary funding.

No-one doubts China has the economic wherewithal to provide a rescue package, but questions still remain about why Beijing would want to ride to the rescue.

One reason is Chinese financiers want to avoid any collateral damage if the economic crisis continues and need to protect their own banks. Another is that Europe is a major market for Chinese manufacturers who would be badly hit in the event of a major recession.

For a long time, too, China has entertained ambitions about investing heavily in Europe and this would be facilitated by a major contribution to EFSF. A successful deal could also open the door for more subtle investment in banking, industry and property, which would give China a huge amount of leverage in Europe.

In turn, that would increase the country’s global reach and influence – from claiming more authority in bodies such as the IMF and resisting US demands for raising the value of the yen.

At a time when Beijing has been under pressure to clean up its human rights record and is looking for greater co-operation on arms sales, that could be a big plus. So, bailing out Europe will be a win-win situation for the Chinese government.

Paradoxically, the crisis facing Europe comes at the time when the tectonic plates of the world’s economy are shifting, and power and wealth are moving towards China and the emerging economies of the Far East.

As that happens the Eurozone can now be helped only by the very countries that would benefit most from the collapse of a clearly ill-judged European system.