China in talks to buy Eurozone debt

Graeme Wearden
Guardian
September 13, 2011

China could step in to help rescue Europe from its debt crisis after holding top-level talks with Italy’s finance minister.

The Italian government confirmed on Tuesday that Giulio Tremonti had met the head of China Investment Corp, the country’s sovereign wealth fund, in Rome last week. It is understood that Tremonti asked the Chinese delegation to consider buying Italy’s sovereign debt and making strategic investments in Italian companies.

The Italian treasury declined to give details of the meeting, but traders were encouraged that Beijing might use its financial muscle to help the eurozone.

News of the talks came as Barack Obama warned that the world economy would suffer badly if Spain and Italy were sucked deeper into the European debt crisis.

“Greece is obviously the biggest immediate problem. And they’re taking some steps to slow the crisis but not solve the crisis,” Obama said, at a roundtable of Spanish journalists in Washington. “The bigger problem is what happens in Spain and Italy if the markets keep making a run at those very big countries,” the president added.

Despite confirmation of the China talks, Italy was forced to pay record levels when it sold €6.5bn (£5.6bn) of government debt on Tuesday morning. The yield, or interest rate, on Italian five-year bonds rose to 5.6% at the auction, a euro-era record.

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This article was posted: Tuesday, September 13, 2011 at 4:43 am

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