China pledges support to eurozone countries

China on Thursday pledged its backing to eurozone countries amid an ongoing debt crisis and said Europe would be a "major market" for investment of Beijing's massive foreign exchange reserves.

"We are ready to support the eurozone countries to overcome the financial crisis and realise economic recovery," foreign ministry spokeswoman Jiang Yu told reporters at a regular briefing.

"In the future, the European Union will be one of the major markets for our forex investment."

China has emerged as a key player in the European debt crisis. Beijing has the world's largest foreign exchange reserves at $2.648 trillion, a significant portion of which is invested in the euro.

At annual Sino-EU trade talks this week, Chinese Commerce Minister Chen Deming expressed concern about Europe's debt crisis and said Beijing was looking to EU policymakers for "real action" to keep the 27-nation bloc on course.

"We are very concerned about whether the European debt crisis can be controlled," Chen told reporters in Beijing on Tuesday.

"We want to see if the EU is able to control sovereign debt risks and whether consensus can be translated into real action to enable Europe to emerge from the financial crisis soon and in a good shape," he added.

In October, China pledged to back Greece, which nearly defaulted this year when investors snubbed its debt, by buying its bonds in future debt issues.

During a visit to Lisbon last month, Chinese President Hu Jintao pledged to help Portugal handle its fiscal crisis but Beijing has not yet made firm promises regarding the purchase of Portuguese government debt.

In Lisbon, the Portuguese newspaper Jornal de Negocios said Wednesday, without citing sources, that China was ready to buy up to €5 billion ($6.5 billion) in Portuguese sovereign bonds.

Portuguese Finance Minister Fernando Teixeira dos Santos travelled last week to China where he met senior Chinese officials to discuss his country's debt woes.

Also last week, EU leaders pledged to defend debt-plagued eurozone nations with a permanent bailout mechanism from mid-2013 -- the successor to a temporary, International Monetary Fund-backed trillion-dollar facility.
Greece and Ireland have both been bailed out by the EU and the IMF. Portugal, Spain, Belgium and even Italy are considered at risk by experts going into 2011.

On Tuesday, Chinese Vice-Premier Wang Qishan said Beijing supported measures taken by the EU and the IMF to ensure financial stability across the eurozone and hoped they would "achieve some results as soon as possible".

Those comments drove up the value of the euro, but that drive was tempered by a warning from Moody's over a possible ratings downgrade for Portugal.

Officials in Greece and Portugal told AFP they did not have firm numbers for Chinese holdings in their sovereign debt. Beijing currently holds more than $900 billion in US debt.

On Thursday, Jiang refused to comment on specifics about how Beijing would invest in Europe, saying the foreign ministry was not the government body in charge of such matters.

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