FEBRUARY 14, 2012, 6:58 A.M. ET
Article from The Wall Street Journal
-- China Premier Wen says Europe is a main investment destination as China diversifies its foreign exchange reserves
-- Wen reiterates statement earlier this month that China is willing to boost involvement in Europe's bailout funds
-- China has been a steady buyer of EFSF bonds, but its exact level of investment in unknown
-- Wen says China willing to increase imports from Europe, but hopes EU will be prudent in taking trade actions against China
(Combines three earlier stories. Recasts first paragraph, adds Wen Jiabao quote in the third paragraph, data on China's foreign exchange reserves in the fourth to fifth paragraphs, comments by Van Rompuy and Barroso in the 12th and 13th paragraphs.)
BEIJING (Dow Jones)--Chinese Premier Wen Jiabao Tuesday said Europe is a main investment avenue for the country as it looks to diversify its foreign exchange reserves, which are predominantly invested in U.S.-dollar assets.
The remarks are one of the strongest indications yet that China will continue to invest in European sovereign debt, using its foreign exchange reserves--the world's largest at $3.18 trillion--to help the continent overcome its sovereign debt crisis.
"China is a long term investor. Europe is a main investment destination for China to diversify its foreign exchange reserves," Wen said at the closing session of an EU-China summit in Beijing.
The exact composition of China's foreign exchange reserves isn't publicly known, but U.S. Treasury bonds make up a dominant portion.
According to U.S. data, China held $1.133 trillion of U.S. Treasurys in November, but analysts say this may understate China's holdings as it buys some debt through intermediaries.
Wen also reiterated comments made earlier this month that China is willing to be further involved in Europe's bailout funds, the European Financial Stability Facility and its future successor, the European Stability Mechanism.
Wen added that China has an "open, active attitude" toward the International Monetary Fund's support for the European Union.
However, the Chinese premier still fell short of offering any specific proposals to help Europe overcome its sovereign-debt crisis.
During German Chancellor Angela Merkel's visit to Beijing earlier this month, Wen said China is considering "involving itself more deeply" in efforts to address the crisis through the EFSF and the ESM.
At a press briefing on Tuesday, European Council President Herman Van Rompuy said he welcomes Wen's support, and that China has shown concrete interest in investing in European sovereign bonds and bonds issued by the EFSF.
China has been a consistent buyer of EFSF bonds and the sovereign bonds of various euro-zone nations, but the exact level of its purchases remains unknown.
Van Rompuy said the euro remains a strong currency. Financial stability is important, but Europe must do more to promote growth and employment, he said, adding that the priority is to create jobs.
European Commission President Jose Manuel Barroso said at the briefing that China's economy is already rebalancing, likely referring to the country's shrinking trade surplus. But he added that measures by China to rebalance further would be welcome.
Wen said China is willing to increase imports from Europe, but that he also hopes Europe can be prudent in taking trade actions against China.
It is urgent for China and the European Union to strengthen mutual trade cooperation, especially against the backdrop of sluggish global economic growth, Wen said.
China will continue to open up market access to European companies and will step up enforcement of intellectual property rights, Wen said, adding that he hopes Europe will also open up market access to Chinese companies, and that Europe and China should agree at an early date to a mutual investment pact.
-Eliot Gao and Aaron Back contributed to this article, Dow Jones Newswires; (86 10) 8400-7705; eliot.gao@dowjones.com
Article from The Wall Street Journal