RECOVERY FROM the euro zone debt crisis is of crucial importance to China, deputy foreign minister Fu Ying said yesterday.
As a major investor in Europe’s debt market, China’s “vital interests” were at stake, she added.
Ms Fu, a former Chinese ambassador to Britain, said China had tried to help European recovery by buying more European debt and encouraging more bilateral trade. The EU is China’s biggest trading partner.
“Whether some European countries can overcome their difficulties and recover from the crisis is vitally important for China,” Ms Fu said. “China has consistently been quite concerned with the state of the European economy.”
She was speaking ahead of a visit by premier Wen Jiabao late next week to Hungary, Britain and Germany, just months after he visited France, Portugal and Spain and offered to help Europe overcome its debt problems.
The European debt crisis is expected to figure highly on the agenda during his visit.
She said taking advantage of investment opportunities in Europe benefited China – which has €2.1 trillion in foreign reserves, the world’s biggest – and also helped European economies.
Around a quarter of China’s reserves are reckoned to be invested in European assets. China has supported some of the European countries with the highest debt, including Greece and Portugal. Last year it offered to buy Greek debt, although it was never revealed how much it actually invested, and pledged to buy €2.8 billion in Portuguese state bonds.
“Therefore since the advent of the financial crisis, China has on one hand been trying to stimulate our economy and overcome the impact of the crisis, while on the other hand provide support to European countries in their efforts to overcome the financial crisis. We have, for example, increased holdings of euro debt and promoted China-European Union trade.”
However, she said Beijing was particularly concerned about Greece, where there have been riots over planned austerity measures and coalition talks between the government and the opposition have broken down, prompting renewed fears that the government might default on its debt.
The Chinese are also monitoring what impact that could have on other struggling euro zone economies like Ireland and Portugal.