China to buy 6 billion euros of Spanish debt: report

MADRID Thu Jan 6, 2011 4:51am EST

China's Vice-Premier Li Keqiang (2nd L) and Spanish Prime Minister Jose Luis Rodriguez Zapatero talk as Chinese Vice-Minister of Energy Qian Zhimin (L) and Spanish Minister of Industry Miguel Sebastian sign a commercial agreement at Madrid's Moncloa Palace January 5, 2011. REUTERS/Susana Vera

China's Vice-Premier Li Keqiang (2nd L) and Spanish Prime Minister Jose Luis Rodriguez Zapatero talk as Chinese Vice-Minister of Energy Qian Zhimin (L) and Spanish Minister of Industry Miguel Sebastian sign a commercial agreement at Madrid's Moncloa Palace January 5, 2011.

Credit: Reuters/Susana Vera

MADRID (Reuters) - Chinese Vice Premier Li Keqiang has said his country is willing to buy about 6 billion euros ($7.9 billion) of Spain's public debt, Spanish newspaper El Pais reported on Thursday, citing government sources.

Li said at a meeting that China was willing to buy as much Spanish public debt as its Greek and Portuguese debt holdings combined, the sources told El Pais. They said that added up to about 6 billion euros in Spanish government bonds.

The Spanish government declined to comment on the report.

China has been increasing its holdings of European government debt, including that issued by Spain, vice commerce minister Gao Hucheng was quoted separately as saying on Thursday.

In a statement on the commerce ministry's website, Gao also said that China was confident in Spanish and European financial markets and that it was also confident that they would be able to overcome Europe's debt crisis. Gao accompanied Li on his trip to Spain this week.

On Thursday Li leaves Madrid, where he has been on a three-day visit, before traveling to the United Kingdom and Germany.

The El Pais report echos remarks Li made earlier this week but it is the first to give a figure.

El Pais could not confirm the 6 billion euro figure with Li, but spoke to Gao, who said that any transaction would be decided on by the date and size of any public debt issue.

Li wrote in an editorial in El Pais on Monday that China has confidence in the Spanish financial market and will continue to buy Spanish public debt.

Spain has come under increasing pressure from international debt markets on concerns it may be forced to follow Greece and Ireland and seek an EU or International Monetary Fund bailout. But while bond yields have risen, demand for Spanish debt remains solid.

(Reporting by Jonathan Gleave; Editing by Hugh Lawson)

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Comments (7)
Someone is trying to make it sound like China is holding all this debt for Europe and the US. Maybe they can explain how a person in China who makes $8 per week is financing this huge amount of debt in other countries. At a 12% savings rate, you would need 100 Chinese workers to get to $100 per week.

I just don’t buy it. It’s not the Chinese we owe all this $ to.

Jan 06, 2011 6:16am EST  --  Report as abuse
wannitnow wrote:
$8 dollar a week? Where d’you pluck that from?

Jan 06, 2011 9:02am EST  --  Report as abuse
Verpoly wrote:
China accumulates huge trade surplus and should be able to finance itself such sovereign bond purchase from Spain or Portugal, without ladening the 1.3b population this burden. It is viewed as their diversification of reserves from majority holding of U.S. treasuries, and more importantly, a gesture of diplomacy with EU members.

Jan 06, 2011 10:07am EST  --  Report as abuse
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