China Continues to Have Confidence in Euro Despite the Crisis

China continues to have confidence in the euro despite the worsening debt crisis and considers the European financial market as one of its “major investment destinations,” said Wednesday the foreign minister, Yang Jiechi (杨洁篪).

Yang’s comments came after Beijing indicated it would continue to diversify its holdings of foreign currencies against the dollar, despite the compromise of U.S. debt.

“China has always maintained confidence in the euro area and treated the European financial market as one of the main investment destinations,” Yang said to reporters while traveling in Albania.

“China believes that a stable and prosperous Europe is important for the stability and development of the world,” he said, according to a statement posted on the website of the Ministry of Foreign Affairs.

“We support the proactive measures taken by the EU and the IMF to restore stability and growth in Europe,” he added.

China has already supported in the past efforts to save the indebted countries in Europe – major buyers of Chinese exports – and promised to buy government bonds denominated in euros to help the region recover from the crisis.

Public support for Mr Yang towards the euro came after Tuesday U.S. President Barack Obama signing an emergency law that has prevented a default on the debt that would have been catastrophic for the world’s largest economy.

The official Chinese news agency Xinhua estimated that the difficult efforts to raise the U.S. debt ceiling had not defused the “debt bomb” in Washington.

The governor of China’s central bank Zhou Xiaochuan, for his part gave a more measured comments and welcomed the agreement but also said China would continue to diversify its investments as the threats still weigh on the dollar.

China, sitting on the largest foreign reserve in the world with 3200 billion at the end of June, is the largest holder of U.S. Treasuries.

China Investment Corp, set up in 2007 to invest a portion of foreign exchange reserves of the country, has tried to diversify since the global financial crisis in 2008.

The sovereign fund of $400 billion in assets has already increased significantly in European bonds in order to achieve higher returns, but the exact figures are hard to find.

Experts believe these stocks are relatively small comparing with major European countries like Germany and France.

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