Beijing, China (FT.com) -- China has promised to take further "concerted action" to support European financial stabilisation, including continuing to buy the bonds of countries at the centre of the sovereign debt crisis, according to senior European officials.
The officials, who declined to be named because of the sensitivity of the issue, said one of China's vice-premiers Wang Qishan, whose responsibilities include oversight of the economy, had given assurances that China would step up support for European stabilisation efforts "if necessary".
Mr Wang made the pledge during the third annual China-EU High Level Economic and Trade Dialogue, held in Beijing on Tuesday.
In comments reported by state media, Mr Wang said China supported measures taken by the European Union and International Monetary Fund to create financial stability in the eurozone, but he gave little detail of what form that support would take.
The EU is China's biggest export market and so Beijing has a strong interest in helping to support stability in the region. Two-way trade between the EU and China was valued at $434bn in the first 11 months of this year -- up more than 30 per cent on the same period in 2009.
Mr Wang's comments boosted the value of the euro against the US dollar as traders saw it as a signal China would continue to allocate a significant portion of its $2,650bn foreign exchange reserves to euro-denominated sovereign debt.
"From the European point of view we appreciate the support of China for the European and international effort to safeguard financial stability in Europe," Olli Rehn, European Commissioner for Economic and Monetary Affairs, said in response to Mr Wang's comments.
"The epicentre of the sovereign debt crisis has been Europe and therefore it is important and appreciated that our international partners including China are expressing their support for this work both verbally and concretely".
China classifies the composition of its foreign exchange reserves as a state secret and European and US officials say it is often very hard to determine the true scale of Chinese purchases of sovereign debt and other global assets.
But countries including Portugal and Greece believe China has made significant purchases of their sovereign debt, in a move that has helped prop up markets in the midst of the crisis.
Analysts say that given the scale of China's reserves and its need to diversify away from its large investments in US government securities it has little choice but to continue buying European bonds over the long term.
But short-term decisions over where to allocate its growing reserves pile and the timing of those purchases can be very significant for countries in the midst of a sovereign debt crisis. CNN
