China moves to Fund EU Stability with $3tn Reserve

China may “move shortly” to help Europe resolve its debt crisis by providing an investment of as much as 100bn euros ($132bn), said Yuan Gangming, an economist at the Chinese Academy of Social Sciences.

The money would probably go to the European Financial Stability Facility, the euro bailout fund, said Yuan, adding that the forecasts are his own and don’t necessarily represent government plans. Economists from the academy provide policy advice without direct involvement in decisions.

Helping Europe is like “hitting two birds with one stone,” Yuan said in an interview in Beijing Feb. 6. The action would have many benefits and few drawbacks, Yuan said.

China, sitting on the world’s largest foreign-exchange reserves at more than $3tn, has signaled a stronger willingness to aid Europe, which is the largest market for its exports. Chinese Premier Wen Jiabao traveled with German Chancellor Angela Merkel last week to Guangdong province, a hub for factories making electronics, shoes and toys for export, and said there that helping Europe would be helping China itself.

ME Status to China by 2016

In September, Wen said at the World Economic Forum’s session in the Chinese city of Dalian that the nation was willing to help and added that Europe should recognize China’s market economy status before the 2016 deadline set by the World Trade Organization.