Fri, Dec 24, 2010 - Page 11 News List

China says willing to help eurozone return to health

HELPING LISBON?A newspaper report said China was ready to buy billions in euros of Portuguese debt, but it is unclear if it will do so as it faces domestic pressure

Reuters, BEIJING

China is willing to help countries in the eurozone return to economic health and will support the IMF element of a bailout package for the bloc, the Chinese foreign ministry said yesterrday.

Chinese Ministry of Foreign Affairs spokeswoman Jiang Yu (姜瑜) also told a regular news conference in Beijing that the eurozone was one of the most important areas for China’s foreign exchange investments, following reports that Beijing could step in to shore up European finances.

The euro steadied against the US dollar and the Swiss franc, helped by the comments, although analysts said the outlook for the single currency was shaky, with fresh losses expected into next year.

The Financial Times reported on Wednesday that China had offered to take more “concerted action” to support European financial stabilization. It cited unnamed senior European officials after talks with Chinese Vice Premier Wang Qishan (王岐山).

Separately, a Portuguese newspaper reported that China was ready to buy between 4 billion (US$5.2 billion) and 5 billion euros of Portuguese sovereign debt to help the country ward off market pressure, which has intensified as investors grew concerned it would be next in line to seek a bailout after Ireland and Greece.

Portuguese officials have said the government is trying to diversify its debt investor base, with China as a priority.

Portuguese Minister of Finance Fernando Teixeira dos Santos met Chinese Minister of Finance Xie Xuren (謝旭人) and the head of the People’s Bank of China during a visit to the country last week.

However, it is unclear whether Beijing would be prepared to take on so much fresh exposure to Portugal, given that Beijing has faced domestic political pressure to invest the country’s foreign reserves more carefully.

Chinese investment funds suffered some large, high-profile losses during the global financial crisis.

In October, during a visit to Greece, Chinese Premier Wen Jiabao (溫家寶) offered to buy Greek bonds when Athens resumed issuing.

A month later, Chinese President Hu Jintao (胡錦濤) visited Portugal and offered “concrete measures” to help the weak economy, but stopped short of promising to buy Portuguese bonds.

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