TweetBEIJING: Europe cannot expect China to use a big portion of its US$3.2 trillion foreign exchange reserves to rescue indebted nations, a top Chinese foreign ministry official said, Beijing's strongest rebuttal yet to suggestions it should bail out the eurozone.
Vice-Foreign Minister Fu Ying said at a forum the argument that China should rescue Europe did not stand and that Europeans might have misunderstood how China managed its reserves.
She did not explicitly rule out using part of China's reserves for more targeted measures, but implied China was not going to ride in with a big chunk of its “savings” and bail out crisis-stricken Europe.
“We cannot use this money domestically to alleviate poverty,” Fu said. “We also can't take this money abroad for development support.”
Economists estimate that Beijing has already invested a fifth of its reserves in euro assets.
While the size of China's reserves is the largest in the world, analysts say two-thirds of that is locked up in dollar assets that cannot be sold, giving Beijing a more modest portion of about US$470bil to invest each year.
Fu said China's reserves were akin to the country's savings and that the 1997 Asian financial crisis taught Beijing how important reserves were to the nation.
China's foreign ministry does not exert direct influence over how the country invests its foreign exchange reserves but can comment on that policy.
Fu said Beijing's refusal to use its reserves to ease Europe's debt woes did not count as a lack of support for the region, which was also China's biggest export market.
“I say the idea that China should save Europe does not stand. What I mean is the money cannot be used this way,” Fu said. “China has never been absent from any international efforts to help Europe. We have always been an active participant, and a healthy particpant as well.”
As the owner of the world's largest foreign exchange reserves, China is one of the few governments with pockets deep enough to buy a sizeable portion of European government debt and help pull the region from its economic malaise. - Reuters
China says it can't use forex reserves to rescue Europe
BEIJING - China's vice foreign minister on Friday ruled out using the nation's vast foreign exchange reserves to bail out Europe, as the debt-laden continent tries to stave off the risk of a massive default.
"The argument that China should rescue Europe does not stand," vice foreign minister Fu Ying told an EU-China forum.
"We cannot use foreign reserves for... rescuing foreign countries. We need to ensure safety, liquidity and profit for the foreign reserves."
European leaders have lobbied China, the world's second largest economy, to help struggling eurozone countries by contributing to a bailout fund, but so far Beijing has not made a firm commitment.
The Asian powerhouse, which has the world's largest foreign exchange reserves at $3.2017 trillion, has said it is keen to seek more investment opportunities in Europe, but has held back from agreeing to contribute to the fund.
Fu pointed to China's purchase of European bonds, increased imports and expanded investment in the continent, which would "create jobs and restore growth".
But she insisted China was not seeking to use its considerable financial clout to exert power over the continent.
"China is no old-fashioned power or empire. China has no intention of seeking power through financial means," she said.
China's commerce minister Chen Deming said last month Beijing would lead an investment delegation to Europe next year, and the head of China's sovereign wealth fund has said it is keen to invest in European infrastructure.
But some in Europe have expressed concern about the potential cost of accepting Beijing's help.
In October, Francois Hollande, the Socialist candidate for next year's French presidential elections, asked if China was really "riding to the rescue of the euro... without making any demands in return?"
Fu also reiterated China's confidence in Europe, just as European leaders prepare to meet at a summit next week that some have billed as their last chance to restore the credibility of eurozone economic governance.
"We have reason to believe that Europe has the wisdom, capacity and resources to make it this time by accelerating adjustment and reform," she said.
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China is one of the largest foreign reserves..And i am not agree with the decision taken by China that it ca;t use it currency to rescue foreign countries..I think it should help other countries it is also very beneficial for its economic growth.
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