The Financial Times reported on its website on Monday that Italy has asked China to make “significant” purchases of Italian debt , resulting in giving the battered euro a much needed lift.
The FT article mentioned that a meeting in Rome was held last week between the chairman of China Investment Corp (CIC), Lou Jiwei, and Italian finance minister Giulio Tremonti, as well as officials from Italian bank Cassa Depositi e Prestiti.
Just two weeks ago an Italian delegation went to Beijing to meet CIC, which is the China’s $300 billion sovereign wealth fund, and also met with China’s State Administration of Foreign Exchange (SAFE), which manages the bulk of China’s foreign exchange reserves.
China has already been giving hints since April that it could buy more debt from the euro zone’s peripheral “indebted” states. There are no precise figures, but it is predicted that the amounts are significant, and China has bought billions of euros of debt. China hold a quarter of its foreign currency reserves of $3.2 trillion in euros.
Reuters reported early today that a former deputy governor of the People’s Bank of China, Wu Xiaoling, said that China is ready to work with others to boost market confidence and that there is no need to panic about the euro zone debt crisis.
“We will continue to support Europe’s measures in maintaining a stable euro,” said Wu, who is now with the National People’s Congress Standing Committee, the law-making body.