On December 22, The Financial Times reported that the Chinese government promised to continue to take “organized action” to help European countries overcome the debt crisis. So, in particular, China will continue to buy bonds of countries most affected by the crisis.
According to the data provided by the source, Chinese Vice Premier Wang Qishan promised to help Europe, one of whose duties is to oversee the economic situation.
Today, the countries of the European Union are the main market for Chinese-made goods and, therefore, the PRC government is very interested in economic support for Europe. For example, in the first eleven months of this year, the trade turnover between the European Union and China amounted to four hundred and thirty-four billion US dollars, which is thirty percent more than the same period last year.
Another reason for China’s assistance may be that China has the largest gold reserves in the world, which must be sold in securities. Europe’s risk bond yields are significantly higher than those of more stable economies, so China can generate more income through investment.
The European Commonwealth said it appreciates the support of China and other international partners.
It should be noted that this year several European countries faced the debt crisis at once. For example, Greece is experiencing difficulties with debt repayment, which was previously forced to take a multi-billion dollar loan from the EU and the IMF. Also, a large debt has accumulated in Portugal and Spain. In order to support these countries, the Central Bank of Europe periodically buys government bonds on local markets.
