UPDATE 1-China trade minister sees chronic euro debt issue

* China trade min warns EU debt crisis could escalate

* Says unclear if debt-laden nations will recover in 3-5 yrs

* But China’s EU ambassador says confident of euro’s future
(Adds comments from China’s EU ambassador)

BEIJING, Dec 24 (BestGrowthStock) – There are no quick fixes for
Europe’s debt crisis and China must be on its guard in case the
problem escalates, especially in January and February, China’s
Commerce Minister Chen Deming said on Friday.

Chen was quoted in the Shanghai Securities News as saying
Europe’s debt problems cannot be solved by selling more
government bonds and setting up a near-$1-trillion rescue fund as
the money has to be rapaid at steep interest rates.

“These measures just turn an acute disease into a chronic
one, and it’s really hard to say whether these countries that are
in deep trouble over the debt crisis can recover in the coming
three or five years,” Chen was quoted as saying.

He did not elaborate on the measures that he thought European
officials should take.

Chen’s comments were the harshest yet from a Chinese
minister, a sign that patience may be wearing thin among some
senior officials in China, which has invested an undisclosed
portion of its $2.65 trillion reserves in the euro.

Earlier this week at annual EU-China trade talks, Chen urged
European authorities to take “real action” to contain the debt
crisis and prevent it from engulfing bigger European economies.

In part to protect its investment in the euro (EUR=: ), China
has repeatedly pledged support for the single currency, a stance
reiterated by China’s ambassador to the European Union on Friday.

“The euro will definitely tide over the current crisis,” Song
Zhe said in a statement on the China Foreign Ministry’s website.

“The euro plays an important role in stabilising the
international monetary system and promoting the diversification
of the international currencies.”

Worried about China’s reliance on the U.S. dollar — China is
the world’s biggest foreign holder of U.S. Treasuries, with
nearly $907 billion in October — senior Chinese officials have
advocated alternatives to the U.S. dollar for a reserve currency.

The euro is seen by many as the most viable alternative right
now. But its future has been put in doubt by investor concerns
Europe officials cannot afford to rescue the bigger economies of
Spain and Italy should the crisis spread.

With Portugal due to repay more than 12 billion euros between
April and June 2011, investor confidence in the euro zone will be
tested in the first quarter of next year.

Market pressure on Portugal’s fiscal health has intensified
in recent weeks as investors worry it could be next in line for a
euro zone bailout after Ireland and Greece. [ID:nLDE6BL0TY]

A Portuguese newspaper said earlier this week that China was
ready to buy 4-5 billion euros of Portuguese government debt to
shield it from funding pressures. China’s central bank declined
to comment on the report.
(Reporting by Zhou Xin and Koh Gui Qing; Editing by XXX)

UPDATE 1-China trade minister sees chronic euro debt issue