China prepared to help eurozone by buying EU bonds

The debt crisis, which has dented demand for Chinese exports and dragged China into its worst downturn in three years, was the primary focus of talks between Wen and German Chancellor Angela Merkel who arrived in Beijing yesterday.

The pair also concluded a flurry of business agreements, including a deal by China to buy 50 Airbus worth £2.2bn, and multi-million-dollar investment deals involving Volkswagen and Chinese telecoms equipment maker ZTE.

Wen said Beijing is willing to continue supporting the debt-stricken eurozone, and will step up talks with the European Union, the European Central Bank and the International Monetary Fund – also known as the troika – to help struggling EU nations.

“China is willing, on condition of fully evaluating the risks, to continue to invest in the eurozone sovereign debt market, and strengthen communication and discussion with the European Union, the European Central Bank the IMF and other key countries to support the indebted eurozone countries in overcoming hardships,” he said after meeting Merkel.

Wen, who did not elaborate, said he remained worried about the crisis in the eurozone.

“Recently, the European debt crisis has continued to worsen giving rise to serious concerns in the international community. Frankly speaking, I am also worried,” Wen said.

“The main worries are two-fold: first is whether Greece will leave the eurozone. The second is whether Italy and Spain will take comprehensive rescue measures.

“Resolving these two problems rests with whether Greece, Spain, Italy and other countries have the determination for reform.”

He said a briefing by Merkel assuaged his concerns slightly, but warned that no quick resolution for the crisis is in sight, underscoring Beijing’s worries about the debt problems in Europe, China’s biggest trading partner.

“After I heard her views, it increased my confidence. But I must honestly say, the implementation of these measures won’t be completely smooth,” Wen said.

China’s latest promise to buy more European sovereign debt if certain conditions are met encapsulates Beijing’s hitherto cool response to Europe’s requests for financial aid. China has worried that it was not getting sufficient protection against losses.