REUTERS - China remains willing to invest in Europe but wants rich economies to show they are serious about tackling debt, Premier Wen Jiabao said on Wednesday, sending the troubled euro zone a mix of reassurances and demands from the world’s biggest foreign exchange holder.
Wen gave China’s highest-level public comment yet to Europe’s recent spiralling economic problems, and while he avoided specifics about debt purchases, he stuck to his past view that the euro zone can surmount its deepening woes.
“China believes that Europe will be able to resolve its problems”, Wen told officials and executives gathered at the World Economic Forum’s summer session in the northeast Chinese port city of Dalian.
“European countries are facing sovereign debt problems. We’ve said countless times that China is willing to give a helping hand, and we’ll continue to invest there.”
Although Wen’s vote of confidence may help steady markets, the Chinese leader also made it plain that Beijing, sitting on some $3.2 trillion in foreign reserves, is concerned about the deteriorating ability of Greece, Italy and other European economies to repay their sovereign debts.
He also suggested China wants the European Union to reciprocate Beijing’s help by moving to grant China “market economy” status, which would lower its exposure in trade anti-dumping cases.
“The governments of all countries must truly shoulder their responsibilities and deal properly with their own affairs,” Wen said in an opening speech, which did not single out any nations by name in the comments on the debt crisis.
“The major developed economies must adopt fiscal and monetary policies that are responsible and effective, and appropriately deal with debt problems, ensuring the secure and stable operation of investment markets,” said Wen.
Analysts estimate that China has about a quarter of its foreign currency reserves held in euro assets.
“We hope major European leaders will take a bold step in their perception of China,” Wen said in a question-and-answer session. “For example, they should recognize China as a market economy.”
Beijing has repeatedly pressed the European Union to give it that status. But the European bloc has not reached agreement on that demand, and its officials have told China that it must meet a set of technical criteria before winning market status.
The Financial Times reported on Monday that Italy had asked Beijing to buy “substantial quantities” of its debt. But a ministerial source told Reuters that recent talks between Italy and China centred on possible investments in Italy’s industrial sector, not the purchase of government bonds.