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China's eurozone vote of confidence

China's eurozone vote of confidence
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The governor of China’s central bank has said it will continue to buy eurozone government bonds and he remains confident in the euro.

But speaking at the University of International Business and Economics in Beijing, Zhou Xiaochua said Europeans should produce investment products that are more attractive for China.

His comments helped push up the value of the euro and shares.

Zhou admitted that China and other emerging nations like Brazil, Russia or India were waiting for the right time to help the bloc, after a European Union state visit was once again met with encouraging words but no concrete public commitments on fresh funding from China.

The central bank governor reiterated previous comments from Premier Wen Jiabao that China was ready to play a bigger role in solving Europe’s debt problems, noting China had not cut its reserves exposure to the euro zone.

“At the G20, our state leaders promised European leaders that, amid the global financial crisis and the Europe sovereign debt crisis, China will not cut the proportion of euro exposure” in its reserves, Zhou said.

“Some people had cast doubt or suspicion over the currency, but for the People’s Bank of China, we have always been confident in the euro and its future,” he added.

Analysts estimate about a quarter of China’s foreign reserves are held in euro-denominated assets.
Beijing has been consistently reluctant to make firm financial commitments, although it has repeatedly said it supports a stable euro.

Zhou comments came in the same week that the head of China’s sovereign wealth fund said that hard assets are more attractive than European government bonds.