China says has helped Europe by buying debt

BEIJING (Reuters) – China still sees risks from euro-zone debt problems and has increased its holdings of European government bonds to help the region, the Chinese foreign ministry said on Thursday.

Asked about the resignation of Portuguese Prime Minister Jose Socrates after parliament rejected his government’s latest austerity measures, China said that it wanted to keep promoting “comprehensive, strategic” relations with Portugal.

“At present, the risks from the Euro sovereign debt crisis have not disappeared, and the world economic outlook is unclear,” foreign ministry spokeswoman Jiang Yu said at a regular news briefing.

“It is in the common interest of China and Europe to strengthen economic and trade cooperation, and that would also benefit global economic growth and recovery,” she added.

Since euro-zone debt worries first shook markets last year, China has at regular intervals said that it still has confidence in the single-currency region and pledged to buy debt issued by some of its troubled member states.

China’s interest in a smooth resolution to the European debt crisis is clear enough. Of its $2.85 trillion in foreign exchange reserves, about 25 percent are estimated to be invested in euro-denominated assets.

“Since late last year and early this year, European countries have experienced sovereign debt problems and debt crises, and the Chinese government has taken this seriously, and also taken measures to increase holdings of euro debt,” Jiang added.

(Reporting by Chris Buckley and Sabrina Mao; Editing by Ken Wills)

China says has helped Europe by buying debt