China underscores support for Europe during debt crisis

Toronto News.Net
Thursday 15th September, 2011

Following Chinese Premier Wen Jiabao’s statement that Chine was willing to buy European debt bonds, a top Chinese official has reinforced the offer.

Zhang Xiaoqiang, vice chairman of the National Development and Reform Commission, has said that China is willing to use its foreign exchange reserves to buy bonds from debt-plagued EU members.

Several European countries are facing funding problems as they struggle with immense sovereign debt problems that are weighing on the European economy.

China, the world’s second-largest economy, holds more than US $3 trillion in foreign exchange reserves, more than any other nation in the world, giving them the ability buy European bonds in immense quantities.

“For the countries experiencing sovereign debt crisis, we are willing to lend a helping hand... to buy some of their bonds,” Mr Zhang said.

Greece is the eurzone’s biggest liability at present, with many analysts claiming the country will inevitably default on its debt, a development that would send shockwaves through the continent’s financial system and impact countries struggling, but managing, to maintain their debt.

It is in China’s interests to prop up Europe, as major fallout from a Greek default would inevitably reach the shores of Asia, undermining the Chinese economy.

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