China cautious over buying eurozone debt

Feb 14, 2012, 9:27 GMT

Beijing - Chinese and EU leaders met on Tuesday but hopes of China agreeing to buy European debt appeared to be dashed by a senior official's comments ahead of the summit.

China was reluctant to invest in European debt and saw better investment prospects in European infrastructure and industry, state media quoted Lou Jiwei, head of the the China Investment Corporation, China's sovereign investment fund, as saying.

European government debt was 'not good enough' for long-term investors, the China Securities Journal quoted Lou as saying at a conference on Monday.

Chinese Premier Wen Jiabao met European Council President Herman Van Rompuy and European Commission President Jose Manuel Barroso at the 14th EU-China Summit in Beijing on Tuesday afternoon.

The talks were expected to focus on the eurozone debt crisis and a range of bilateral and global economic and political issues.

Van Rompuy and Barroso would hold separate talks with President Hu Jintao and Vice-Premier Li Keqiang, EU officials said.

'We face common challenges and the world needs cooperative and responsible partnerships to overcome them,' Barroso said before the talks.

'I believe that a forward-looking and growing EU-China partnership can represent an important pillar for global stability and prosperity,' he said.

Chinese state media said the talks took place against the backdrop of 'growing global economic uncertainty and the spreading euro debt crisis.'

The summit would 'release a signal which shows the outside world that China and Europe will face the crisis hand in hand ... and stimulate global economic growth,' official Xinhua news agency said.

The European Union was keen to win China's backing for its handling of the debt crisis.

But Xing Hua of the Beijing-based China Institute of International Studies said China wanted to avoid risky investments and was likely to wait until the European Stability Mechanism replaced the European Financial Stability Facility as the EU's bailout fund in July.

'We hope first to see the EU countries show more confidence in the EFSF and ESM ... and guarantee their support for those two funds,' Xing told dpa before the summit.

Another commentary on Tuesday on the website of People's Daily, the ruling Communist Party's official newspaper, said China had no plans to 'buy up' or control Europe.

Ratings firm Moody's on Monday lowered its credit ratings for Italy, Spain, Portugal, Malta, Slovenia and Slovakia, and gave a 'negative' outlook for France, Britain and Austria.

The downgrades reflected those European economies' 'susceptibility to the growing financial and macroeconomic risks emanating from the euro area crisis,' Moody's said.

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