China Weighs Up Euro Bailout Fund Investment
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3:46pm UK, Friday October 28, 2011
“We need to wait for the technicalities to be clear and also to carry out serious studies before we can decide on investment,” China’s vice-finance minister Zhu Guangyao said.
“We hope that all these technical and specialised arrangements can be thrashed out at an early date and can be implemented and feasible.”
The minister’s comments came as the head of the eurozone rescue fund prepares to meet officials from the Chinese central bank and finance ministry.
Klaus Regling, chief executive of the European Financial Stability Facility (EFSF), stated China needed “attractive, solid, safe investments”.
Bonds from the EFSF fell into this category, he said.
Meanwhile, two senior advisers to the Chinese government have reportedly told the Financial Times it was “very likely” to put money into the fund.
The paper quotes a source “familiar with the thinking of the Chinese leadership” as saying that “something a bit above $100bn is not inconceivable”.
“From China’s point of view it kills two birds with one stone,” Seijiro Takeshita of investment bank Mizuho International told Sky News.
“It can diversify its investment and secondly it enables them to have a lot more bargaining power.
“Having a massive sum of these bond issues puts them in a much more favourable position.”
Speaking on Jeff Randall Live, Financial Times editor Lionel Barber said: “The Chinese have signalled interest.
“We spoke to two senior officials, one being a member of the monetary policy committee so someone quite close to the central bank and powers that be.
“They are saying they are very likely but with conditions and one of those will be who else is coming in.
“The largest trade partner for China is Europe so they have got a lot at stake. This is not a gesture of magnanimity.”
The reports came after French President Nicolas Sarkozy and Chinese leader Hu Jintao spoke on the phone on Thursday and pledged to co-operate to revive global growth.
Beijing has so far only expressed sympathy for the EU but has not committed any cash and only pledged to help by continuing business as usual.
Joining in the bailout could help China in its campaign to join the top ranks of governments managing the global economy.
source : news.sky.com
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Submited at Saturday, October 29th, 2011 at 12:00 am on Business by jessica
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