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Italy looks to China to relieve debt problems

Italy looks to China to relieve debt problems
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China is a country of deep, deep pockets so who better to turn to when confidence is low and debt is high. Italian officials have been in Beijing and the boss of the China Investment Corporation led a delegation to Rome last week.

There is still speculation as to the exact details of the meetings. Italian officials have confirmed that Foreign Minister Giulio Tremonti sat down with the Chinese representatives to offer what is believed to be bonds and investments in strategic companies.

China has been sitting on huge piles of cash with foreign reserves of 2,300 billion euros. The country already holds some of Italy’s debt, although exactly how much remains unclear. Further investment may be a statement to Europe, believes one analyst, Robert Halver of Baader Bank.

“China is willing to buy Italian bonds. It’s a clear message to Brussels and Berlin because they made clear that Italy is still a member of the eurozone. They’re not willing to buy Greek bonds.” he opined.

The potential move could be welcomed by nervous investors and a provide a boost to the beleaguered markets, although one analyst cautioned that there had been rumours in the past of Chinese buying in Portugal, Greece and Spain but nothing materialised.

A Chinese foreign office spokeswoman, asked about buying Italian assets, said Europe is one of her nation’s main investment destinations, even if she didn’t specify Italy.

And from the other side of the world, there are more calls to eurozone leaders that they must show the markets they are taking responsibility for the debt crisis.

President Obama is quoted in the Spanish press as saying, “the leaders in Europe must meet and take a decision on how to coordinate monetary integration with more effective coordinated fiscal policy”.