China on Wednesday reiterated its support for EU and the euro. The Chinese government has made no commitment, but said it would continue to buy European sovereign debt.
“We have confidence in the development of Europe and we have confidence in the euro,” said the governor of China’s central bank, Zhou Xiaochuan.
“China will continue to invest in European government bonds while ensuring their safety, liquidity and the appreciation of their value,” said Zhou.
The Chinese government, which claims to seek to diversify the investments of its foreign reserves abroad, hold, according to unconfirmed expert estimates for more than $ 500 billion sovereign debt of European countries.
China has also recently stepped up purchases of European companies considered potentially more profitable than bonds, including using its sovereign wealth fund, China Investment Corporation (CIC).
The CIC, whose resources were $ 410 billion in late 2010, just received a new injection of capital with undisclosed amount.
Echoing remarks made Tuesday by Chinese Premier Wen Jiabao, Zhou added that China would “become more involved in finding a solution to the debt crisis in Europe through various channels such as the IMF, the European financial stability or the European Stability Mechanism” to be set up in July.
The governor reiterated that China could use exchange reserves of the country for purchasing the sovereign debt of the first world.
For their part, European leaders have stressed the efforts made by EU states to clean up their finances and expressed confidence that the old continent was more united and strengthened.
“The Greek leaders have made courageous decisions in incredibly difficult circumstances,” said the EU president, in reference to voting by the Greek parliament of a new austerity plan, which triggered massive protests accompanied with violence.
“Some European governments have been forced to resign for taking unpopular measures, but all new governments committed themselves to adopt and implement reforms” assured Van Rompuy to China. He added that “there is no room for populism” in Europe.
China in turn suffers from a lack of consumption in domestic economy, and people fear the government is squandering the fruits of people’s hard works to assist countries whose living standards are much higher.
But Chinese leaders also know that poor health of the European economy has a direct impact on the exporters’ order books of the second world economy, for which the EU is the largest market.
The overall bilateral trade surplus in Beijing, now exceed one billion dollars per day, Barroso noted, stressing the interdependence of the two economies.
Whilst before the deepening debt crisis, China has over the past year tend to keep away from European institutions to further negotiate with the States composing the Union, the central bank governor said he supported European construction.
“We believe that as the European countries can consolidate all (their economies), they will have the ability to solve their problems,” said Zhou.