China will continue to buy Spanish public debt, despite market jitters about the country’s fiscal prospects, announced Chinese Vice Premier Li Keqiang ahead of a three-day visit to Madrid.
With Greece and Ireland needing to be bailed out in quick succession last year, the market spotlight is currently on Portugal and Spain, where governments have been struggling to tame their rising costs of borrowing.
“We have confidence in the Spanish financial market, which has translated into the acquisition of public debt, an activity that we will continue in the future,” Li wrote in an editorial in the El Pais newspaper today. He is due to arrive in Madrid on Tuesday.
Europe’s ongoing sovereign debt crisis has seen Beijing extend a helping hand more than once. China already bought a reported 400 million euro worth of Spanish bonds in July last year. A slew of Chinese leaders have been visiting the fiscally troubled capitals of Europe in recent months promising support, even as the euro zone’s own economic heavyweights like Germany are accused of dragging their feet in response to the crises.
China has repeatedly linked its goodwill gestures towards Europe to the hope that the region does not succumb to protectionist tendencies. Nonetheless, the European Union’s top official in charge of industry, Antonio Tajani, suggested in an interview to the German Handelsblatt newspaper last week that Europe should establish a new authority to block Chinese takeovers of strategic European businesses.
“Chinese companies have the means to buy more and more European enterprises with key technologies in important sectors,” Tajani said. “It is a question of investments but behind that there is also a strategic policy, to which Europe should respond politically.”
