BEIJING: The head of China's central bank, Zhou Xiaochuan, on Friday expressed confidence in the eurozone and said Beijing would support countries struggling to overcome their massive debt woes.
"China is very confident about the eurozone," Zhou told a news conference on the sidelines of the country's annual session of parliament.
"Despite some difficulties in some European countries, China still strongly supports these countries in overcoming their fiscal difficulties and achieving economic recovery." The governor of the People's Bank of China added: "We are confident about their economic prospects." Beijing has the world's largest foreign exchange reserves at $2.847 trillion as of the end of 2010. A large chunk, $1.16 trillion, is parked in low-yielding US Treasuries but a growing portion is invested in euro-denominated assets. In January, PBoC vice Governor Yi Gang said European financial markets would remain "one of the most important investment areas for China's foreign exchange reserves". Since December, China has pledged to buy government bonds from struggling Spain, Greece and Portugal, but no concrete commitments on the size of those investments have been revealed. Saddled with heavy debt and huge public deficits, several eurozone countries have been forced to offer higher interest rates to attract investors to their sovereign bonds. Leaders of the 17 eurozone countries plus the head of the European Central Bank, Jean-Claude Trichet, are to meet in Brussels on Friday to discuss the ongoing debt crisis.
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