A Chinese Foreign Ministry spokeswoman has said the country is willing to help countries in the euro zone to return to economic health and will support the International Monetary Fund bail-out package for the zone.
Spokeswoman Jiang Yu also told a regular news conference in Beijing that the euro zone was one of the important areas for China's foreign exchange investments. The comments followed a report that China could step in to shore up European finances.
China offered to take more 'concerted action' to support European financial stabilisation, the Financial Times said yesterday, citing unnamed senior European officials after talks with Chinese Vice Premier Wang Qishan.
Separately, a Portuguese newspaper reported yesterday that China was ready to buy €4-5 billion of Portuguese sovereign debt to help the country ward off pressure in debt markets.
China has the world's largest foreign exchange reserves at $2.648 trillion, with a large chunk - nearly $907 billion - parked in low-yielding US Treasuries. Amid the financial crisis, China has tried to diversify its holdings to improve returns, and a growing portion is being invested in euro-denominated assets as well as in sovereign debt in other Asian countries such as Japan.
While China has pledged to buy bonds from Greece and Portugal, it has not yet made any concrete commitments on the size of its investment. Exact figures on the size of China's euro holdings are hard to find, but analysts estimate its stockpile of bonds from debt-laden states is relatively small, with most holdings in large countries such as Germany and France.
