CHINA IS keeping a close eye on Europe’s economic conditions, but continues to regard the euro zone as one of its main investment destinations, Premier Wen Jiabao said in a phone call with European Commission president José Manuel Barroso.
However, reflecting anxieties in the world’s second largest economy about ongoing debt turbulence in the bloc, Mr Wen urged Europe to ensure the safety of Chinese assets.
“China always has had confidence in the European economy and the euro and will continue to make Europe one of its main investment markets,” he said, in a report by the Xinhua news agency.
China’s economy grew by 9.5 per cent in the second quarter, down from a 9.7 per cent expansion in the first quarter as the government tries to ease inflation and cool the property market.
In a recent article in the Qiushi magazine, a Communist Party periodical, Mr Wen said efforts to take some of the pressure out of the economy were going according to plan.
Beijing has regularly expressed its support for debt-laden European countries, which are major buyers of Chinese exports, but there is a sense that patience is wearing thin about Europe’s scattergun response to the crisis.
The euro zone is China’s biggest trading partner, with bilateral trade worth €395 billion last year, up 13.9 per cent on 2009. Chinese exports to the EU reached €281.9 billion in 2010, up 18.9 per cent on the previous year.
No one knows what China’s holdings of euro bonds are, though it is said to be focused on Germany and France, and much smaller than its holdings of US debt. Some analysts reckon it is about one quarter of China’s $3.2 trillion (€2.25 trillion) in foreign exchange reserves.
China is the biggest foreign investor in US treasury bonds, with about $1.17 trillion (€820 billion). Dollar investments account for about 70 per cent of foreign exchange reserves.
The Xinhua report cited Mr Barroso as saying that Europe was taking measures to maintain the stability of its economy and that it had the capacity to resolve the difficulties it faces.
