Fresh humiliation for eurozone as China says it will bail out debt-ridden nations
China has said it is willing to bail out debt-ridden countries in the euro zone using its $2.7trillion overseas investment fund.
In a fresh humiliation for Europe, Foreign Ministry spokesman Jiang Yu said it was one of the most important areas for China’s foreign exchange investments.
The country has already approached struggling European countries with financial aid, including offering to buy Greece’s debt in October and promising to buy $4billion of Portuguese government debt.
‘To have any discernible effect China will have to buy a lot more than 5billion euros if they expect to have any impact on the negative sentiment surrounding Europe,’ said Michael Hewson, currency analyst at CMC Markets.
China’s astonishing economic growth has put it on track to overtake America as the world’s economic powerhouse within two years, a recent report claimed.
But experts believed still be some years before America’s leadership role is really challenged – largely because Beijing has given no indication it is ready to take on the responsibility of shepherding the world’ economy.
This foray into the future of the euro could be a signal from Beijing that it is ready to change that perception.
The euro rose temporarily on the news of China’s support – but was sinking again this morning to a three-week low against the dollar.