Chinese support for Europe could hit $100bn: banker

3rd November 2011, Comments 0 comments

China could provide up to $100 billion (73 billion euros) to support debt-wracked eurozone, a member of the Chinese central bank's monetary policy committee said in an interview Thursday.

If certain conditions are met "one could think that an amount around 100 million dollars is not inconceivable," Li Daokui said in an interview in the French daily Le Figaro.

Europe has been looking to China, which has amassed a massive foreign currency reserves, to help bankroll the expansion of its bailout fund to one trillion euros to contain its debt crisis.

The head of the European Financial Stability Facility, Klaus Regling, travelled to Beijing last Friday for talks about a possible contribution, but China has so far made no firm commitment to provide financial assistance.

"China is ready to help Europe, it is clear, but there are at least two preliminary conditions" to fulfill, said Li.

The first is that the EFSF will be effective at stabilising Europe's debt crisis.

"Beijing wants to be certain that the mechanisms work," said Li.

"Nothing would be worse for China than to contribute to something that ends up failing in several months."

The second condition concerns what sort of guarantees will be offered in case the bailout fails, said Li, in particular if they will be backed by France and Germany.

Money raised from investors so far by the EFSF has been fully backed by guarantees from eurozone members, but details have yet to be worked out how much protection will be offered as the fund expands.

China has watched with increasing concern as the debt crisis has deepened in Europe, its top export market, and has repeatedly urged it to quickly get a grip on the situation.

Beijing already holds $550 billion in European sovereign debt.

Chinese President Hu Jintao held talks Wednesday with his French counterpart Nicolas Sarkozy ahead of the G20 summit on Thursday and Friday in the southern French city of Cannes, where the European debt crisis is set to dominate talks.

"It has to be depended mainly on Europe to resolve the European debt problem," Hu told Sarkozy, according to the official Xinhua news agency.

© 2011 AFP

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