HONG KONG: Chinese Premier Wen Jiabao heads to debt-stricken Europe seeking to safeguard China's vast holdings of euro-denominated assets as Greece teeters on the brink of default and preserve trade growth with its largest trading partner. A senior diplomat stressed ahead of the June 24-28 visit to Hungary, Britain and Germany that China's vital interests are at stake if Europe cannot resolve its debt crisis, given that an estimated quarter of its $3.05 trillion foreign reserves are in euro-denominated assets. “Greece's problems are very serious so Wen Jiabao's visit can help illustrate China's confidence (in the region),” said Ding Zhijie, a professor with the University of International Business and Economics in Beijing. “It can also help China better assess the current situation in Europe to finesse their policies and clarify their future role in Europe's debt crisis.” Keen to diversify its assets and the world's largest stockpile of foreign currency reserves away from the US dollar, China is torn between an obligation to safeguard its euro-denominated assets through new investments and not wanting to saddle itself with excessive risk. But Wang He, a researcher with the Institute of European Studies at top government think tank the Chinese Academy of Social Sciences, said it was important Europe did not put too many unrealistic hopes in what China could deliver. “You can't expect China to be your saviour,” Wang said. “We can help you, but you must help yourself by reforming.” Since euro zone debt worries first rippled through markets last year, China has repeatedly said it has confidence in the single-currency region and pledged to buy debt issued by some of its troubled member states. Raffaello Pantucci, a Shanghai-based China program associate at the European Council on Foreign Relations, said that while China could play a critical role in buying distressed euro debt, it was unlikely Wen would announce a “game-changing purchase” of debt Europeans might be looking for. “The Chinese are quite pragmatic. At the end of the day, I don't think they are in the business of giving their money away,” he told Reuters. The markets too, may dismiss empty proclamations of support from Beijing without disclosure of specific investment amounts. Greece has been struggling to avert a euro zone sovereign debt default that could destabilise the global financial system and pile further misery on the euro. European leaders will try to convince Greeks and financial markets when they this week that they have a workable plan to help Athens avoid a debt default and return to financial stability. It is now set to approve a new austerity package to secure emergency loans as part of a 110 billion euro EU/IMF aid package due in two weeks that hinges on a new five-year belt-tightening plan. The 27-member EU bloc is now China's largest trading partner with bilateral trade worth nearly 400 billion euros ($573 billion). While Chinese exports jumped 14 percent to hit 282 billion euros last year, the debt crisis has begun to weigh. “In the last few months China's exports have been falling sequentially ... mainly due to the European debt crisis, said Andy Xie, an independent China economist.
