There have been rumors for months that China would use part of its huge currency reserves to buy bonds of the weakest EU nations. This would help prop up their economies which are major importers of Chinese goods. Whether the investments are prudent is beside the point, perhaps. China need the demand for its products more than a good return on its money. China’s GDP growth and PMI have already started to weaken
China prime minister Wen Jiabao told the press that his nation might put money into either the European Financial Stability Facility or the European Stability Mechanism (ESM).
Reuters reports that
Wen made the comments in a joint media briefing with visiting German Chancellor Angela Merkel in Beijing, but he did not made any explicit financial commitment. He said China is still studying how it might lend further support.
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