China says it’s ready to help, but gives no details

China is ready to help resolve Europe’s debt crisis, its premier said yesterday, but he gave no details a day after the nation’s sovereign wealth fund ducked calls by German Chancellor Angela Merkel for it to buy euro government bonds.

At a Beijing summit delayed since late last year while European leaders have grappled for solutions to the two-year-old crisis, Chinese premier Wen Jiabao reiterated supportive sentiments.

“China is ready to increase its participation in resolving the European debt problems. We are willing to conduct close communication and cooperation with the EU side,” Wen said.

Speaking at the same venue as European Council president Herman Van Rompuy and European Commission president Jose Manuel Barroso, Wen added: “We match our words with actions.”

However, his public statements have so far stopped well short of promising to provide funds to bail out governments or buy billions of euro of new bonds.

On Monday, the head of China’s $410bn (€311bn) sovereign wealth fund said Germany’s Merkel had asked it and other long-term investors to buy European government debt when she visited Beijing earlier this month.

But he said such investments were “difficult” for long-term investors.

Lou Jiwei, chairman of China Investment Corp, said any fresh injection of funds into Europe would be in industrial and other real assets, not government bonds.

The EU’s Van Rompuy, pursuing the eurozone’s long-running efforts to win China’s financial help, said yesterday: “Investors in Europe can be reassured that we have not just navigated a difficult bend, we have turned a corner.”

Greek lawmakers backed drastic cuts in wages, pensions and jobs on Sunday as the price of a €130bn ($170bn) bailout by the European Union and International Monetary Fund to avert a messy default.

But Athens was still struggling yesterday to wring out another €325m in budget cuts to satisfy eurozone finance ministers mulling whether to sign off on a rescue package to save the country from a chaotic default.

The crisis has also forced international financial rescues for Ireland and Portugal.

While the eurozone has created a €440bn bailout fund, this is widely regarded as inadequate to cope with a loss of market confidence in a major debtor economy, such as Italy.

Van Rompuy insisted that eurozone economic fundamentals were sound.

However, he acknowledged more was needed to secure recovery.

“We recognise that financial stability is a necessary, but not a sufficient condition for economic recovery. We must do more, in particular on economic growth and on unemployment,” he said.

Reuters