China to keep investing in eurozone debt

Beijing: China will continue to invest in eurozone government debt, Chinese central bank governor Zhou Xiaochuan said on Wednesday, expressing his confidence in both the euro and in the ability of eurozone members to solve their debt problems.

China will play a bigger role in solving Europe’s problems vis the International Monetary Fund and the European Financial Stability Fund, or EFSF, Zhou said, echoing earlier remarks made by Chinese Premier Wen Jiabao.

“We strongly believe European countries can work together to handle the challenges. They are able to solve the sovereign debt crisis,” Zhou said in a speech at the University of International Business and Economics in Beijing.

“The People’s Bank of China has always maintained close cooperation and contacts with the European Central Bank, and we support each other in many policy aspects. The PBOC firmly supports the ECB’s recent measures to address the difficulties.”

Verbal reassurances from Zhou and senior Chinese leaders come as European Council president Herman Van Rompuy and European Commission president Jose Manuel Barroso visit Beijing for the China-EU summit.

The summit was delayed since late last year as European leaders struggled to deal with an escalating debt crisis.

China has expressed alarm at protests and strikes sweeping Europe, while lauding a fiscal agreement to be signed in March that will build up a massive fund to backstop European debt.

“We believe the fiscal agreement will mark a big step forward toward closer economic and fiscal union, which will significantly boost EU member countries’ fiscal sustainability and improve the sovereign debt conditions.”

Reuters