China backs Spain to emerge from crisis: Beijing

3rd January 2011, Comments 0 comments

China is confident Spain will recover from its economic crisis and Beijing will buy Spanish public debt despite market fears of an Irish-style bailout, a top Chinese official said Monday.

The comments by Vice Premier Li Keqiang were made in an op-ed piece in Spain's leading daily El Pais one day ahead of his arrival in Madrid for a three-day official visit, the start of a European tour that will also include Britain and Germany.

"Since China is a responsible investor country in the long-term on the European financial markets, and in particular in Spain, we have confidence in the Spanish financial market, which has been translated into the acquisition of its public debt, something we will continue to do in the future," he said.

"China supports the measures adopted by Spain for its economic and financial readjustment, with the firm conviction that it will achieve a general economic recovery", said Li, who is widely tipped to become China's next premier.

Investors have shown deep concern over the annual deficit being racked up by the Spanish government and its heavy reliance on the bond markets, leading them to demand higher and higher returns.

An economic and financial rescue for Spain would be far bigger than anything seen to date in Europe: the size of its economy is twice that of Greece, Ireland and Portugal combined.

Spanish public debt rose to 57.7 percent of GDP at the end of September from 53.2 percent at the end of 2009.

Chinese state media on Monday also quoted Beijing's ambassador to Madrid as saying China is willing to make "positive efforts" to help Spain with its economic recovery.

Li's meetings this week with Prime Minister Jose Luis Rodriguez Zapatero and Finance Minister Elena Salgado will "play a key role" in financial stabilisation, Xinhua news agency quoted the ambassador, Zhu Bangzao, as saying.

Their talks will focus on expanding trade and economic cooperation and will also help "restore market confidence," Zhu said.

The Spanish economy, the EU's fifth largest, slumped into recession during the second half of 2008 as the global financial meltdown compounded the collapse of the once-booming property market.

It emerged with tepid growth of just 0.1 percent in the first quarter of 2010 and 0.2 percent in the second, but then stalled with zero percent growth in the third.

© 2011 AFP

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