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China likely to buy more Spanish government bonds: vice premier

Business Materials 5 January 2011 05:59
Visiting Chinese Vice Premier Li Keqiang said on Tuesday in Madrid that China is likely to buy more Spanish government bonds to help the country deal with market concerns about its solvency, Xinhua reported.
China likely to buy more Spanish government bonds: vice premier

Visiting Chinese Vice Premier Li Keqiang said on Tuesday in Madrid that China is likely to buy more Spanish government bonds to help the country deal with market concerns about its solvency, Xinhua reported.

Li made the remarks during a meeting with Spanish Second Deputy Prime Minister and Minister of Economy and Finance Elena Salgado.

Li noted that the Spanish government has taken a series of measures to fight the global financial crisis, which will help lift the country out of its severest woes and pave the way for sound economic development in the long run.

"We believe Spain, with its government and people working together, will surely overcome current economic and fiscal difficulties," he said.

Li said that China, as a long-term and responsible player in the Spanish government bonds market, has not reduced its holdings, and even increased its buying activities amid European debt concerns.

"We will buy more (Spanish government bonds) depending on market conditions," he said.

The Chinese leader arrived in Madrid earlier in the day, kicking off a three-day official visit to Spain.

Spain is the first leg of his three-nation European tour, which will also take him to Germany and Britain.

Spain, the fourth largest economy in the eurozone, has been hit hard by the global financial crisis.

Due to sluggish economic growth and high unemployment, the Spanish government's finances have been quite stretched, and some investors are worried that it may not be able to fully repay its debts.

Some investors have shunned Spanish government bonds and those who remain in the market demand much higher yielding rates, thus pushing borrowing costs up for the Spanish government.

The Spanish government has since taken a series of austerity measures to reduce government spending while trying to restore fiscal balance and economic recovery.

Chinese leaders have said repeatedly they want to see a stable eurozone and a dynamic euro. China has bought European government bonds as part of its efforts to help alleviate the so-called sovereign debt crisis.

Li suggested during the Tuesday meeting that China and Spain further expand cooperation on trade, investment and new energy as a way of fighting the global financial crisis and achieving common development.

Salgado briefed Li on Spain's current economic conditions.

She said the Spanish government has take measures to reduce fiscal deficits and thus far has achieved positive results.

She also said Spain appreciates the important role Chinese investors have played in stabilizing Spanish financial markets, adding the Spanish government supports efforts by Spanish companies to invest in China and welcomes Chinese investments in Spain.

She said the Spanish government has come up with specific plans for attracting more Chinese tourists to the country, and suggested Spain and China join hands in developing markets in Latin America, where Spain has strong, traditional cultural and economic links.

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