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China buys up EU government debt

China has been increasing its holdings of European government debt amid the euro-zone crisis, including that of Spain.

Li Keqiang and Elena Salgado
Chinese Executive-Vice Premier Li Keqiang (L) and Spanish Vice President and Minister of Finance Elena Salgado prior to talks on Jan. 4, 2011 in Madrid. Keqiang is on a three-day official visit in Europe, starting with Spain and including Britain and Germany. (Dominique Faget/AFP/Getty Images)

China has been increasing its holdings of European government debt, including that issued by Spain, amid the euro-zone crisis, Chinese Vice Commerce Minister Gao Hucheng was quoted as saying on Thursday.

The Spanish daily El Pais on Thursday cited Spanish government sources as saying China has committed to buy about 6 billion euros ($7.89 billion) worth of Spanish sovereign debt.

In a statement on the ministry's website, Gao also said that China was confident in Spanish and European financial markets and confident that they would be able to overcome Europe's debt crisis, the Wall Street Journal reported.

"We will continue to buy debt and work together with Spain," said Gao, who is accompanying Chinese Vice Premier Li Keqiang on a visit to Spain and other European countries.

Both officials have expressed confidence that Spain will recover from its economic crisis despite market fears of an Irish-style bailout.

El Pais published an article written by Vice Premier Li, titled, "China and Spain: A brighter future through win-win cooperation."

Political and corporate leaders increasingly see China as a source of capital. China's foreign-exchange reserves are by far the world's largest, totaling $2.648 trillion at the end of September.

In the meantime, the economic mood in Europe ended 2010 on a high note, a key indicator released Thursday showed.

The European Commission's closely watched business and consumer survey for the members of the euro currency bloc rose from 105.2 in November to a more-than-forecast 106.2 last month. The consensus among economists was that the index would nudge up to 105.5.

Ben May, European economist with the research group Capital Economics, told Monstersandcritics.com the data suggested that, "the improving global economic outlook is offsetting the ongoing troubles in the periphery."

http://www.globalpost.com/dispatch/china-and-its-neighbors/110106/china-european-economy-debt-eurozone-crisis