China reiterates confidence in EU’s ability to solve crisis

China will continue to invest in eurozone government debt and it remains confident in the euro, the country’s central bank governor said yesterday, while calling on Europeans to produce more attractive investment products for China.

Zhou Xiaochuan admitted that China and other emerging nations such as Brazil, Russia and India were waiting for the right time to help the bloc, after a European Union state visit was once again met with encouraging words but no concrete public commitments on fresh funding from China.

But he also suggested Europe needed to work harder to entice Beijing to part with its capital.

“We also hope that the euro- zone and EU can innovate their mechanisms to offer new products that are more helpful for Sino-Europe co-operation,” he said.

The central bank governor reiterated previous comments from Premier Wen Jiabao that China was ready to play a bigger role in solving Europe’s debt problems, noting China had not cut its reserves exposure to the eurozone.

“At the G20, our state leaders promised European leaders that, amid the global financial crisis and the Europe sovereign debt crisis, China will not cut the proportion of euro exposure” in its reserves, Zhou said in a speech at the University of International Business and Economics in Beijing.

“Some people had cast doubt or suspicion over the currency, but for the People’s Bank of China, we have always been confident in the euro and its future,” he added.

Although Zhou’s comments largely underlined China’s established stance, the remarks helped push the euro higher and were cited in markets for supporting stocks buying in Asia.

Deputy finance minister Zhu Guangyao, who is visiting the US with leader-in-waiting Xi Jinping, also sought to reassure Europe of China’s support.

“China’s commercial investment in Europe has continued, under the principles of safety, liquidity and appropriate returns,” he said.

“We have not adjusted out investment structure. That, it should be said, has been China offering its true trust and support at a crucial moment in European countries addressing their sovereign debt problems,” he said.

Any bigger role in solving the debt crisis would be via the International Monetary Fund and the European Financial Stability Fund, or EFSF, Zhou said, echoing Wen’s comments.

“We strongly believe European countries can work together to handle the challenges,” Zhou said. “They are able to solve the sovereign debt crisis.”

Verbal reassurances from Zhou and senior Chinese leaders come as European Council president Herman Van Rompuy and European Commission president Jose Manuel Barroso are visiting Beijing for a China-EU summit.

Van Rompuy assured his Chinese hosts that they should not underestimate the strong political incentive to keep the eurozone intact.

Chinese President Hu Jintao, meeting Van Rompuy and Barroso in the Great Hall of the People, reiterated the government line that China was confident Europe could overcome its difficulties, state radio reported.

“China is paying close attention, and supports the series of steps taken by the EU, the IMF and ECB to deal with the debt crisis, and will continue to increase policy communication and coordination with the EU,” it paraphrased Hu as saying.

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