Debt Crisis: China to Rescue Italy?

The center-right Italian government is turning to China, in the hope that Beijing will help the country overcome its debt crisis. Rome hopes China’s sovereign wealth funds to buy significant Italian bonds and investment in local companies.

According to Italian officials quoted by the British newspaper the Financial Times, Lou Jiwei (楼继伟), chairman of the China Investment Corp., one of the largest Sovereign wealth funds in the world, went to Rome last week to visit the Minister of Economy and Finance, Giulio Tremonti. An Italian delegation had also been sent to Beijing two weeks before. Chinese would investment to Rome, at a time when Italian public debt representing almost 120% of GDP this year. Only Greece has more debt than Italy in Europe. The share of 1,900 billion euros of Italian debt already held by China is still unknown, but it already amounted to almost 4%, according to a high position Italian sources cited by the FT.

The Italian Secretary of State for Economic Antonio Gentile, denied the information. “We did not request any special assistance from China. The demand for Italian government bonds is good,” he said.