China promises support for euro and euro bonds

Chinese Premier Wen Jiabao says his country will continue
to support both the euro and European government bonds.

“I have made clear that China supports a stable
euro,” he said.

He also promised not to cut China’s investment in
European bonds, despite the recent crisis which has weakened the value of many
such bonds.

Mr Wen is visiting Greece, the worst-hit of the 27-nation
European Union. He has promised to buy Greek government bonds the next time
they went on sale.

China has said it needs to diversify its foreign currency
holdings and has bought Spanish government bonds.

Later in the week, the Chinese leader will attend an
EU-China, where the subject of the yuan is almost certain to come up.

China is accused of keeping its currency artificially low
against other world currencies, particularly the dollar- which makes Chinese
goods cheaper on world markets, and non-Chinese goods more expensive within the

That argument is hottest in the US, where the House of
Representatives has backed legislation that in theory paves the way for trade
sanctions on China.

Mr Wen urged the EU to recognise China as a market
economy, something that would make it less vulnerable to anti-dumping charges
under World Trade Organization rules.

He added that despite its growth China remained an
emerging economy: “Per capita GDP is just one eighth of Greece’s and the
percentage of population below the poverty line is three times that of Greece.
China continues to be an emerging country.”

China’s economic growth slowed to an annual rate of 10.3%
in the second quarter of the year, from 11.9% in the first quarter.

The government is targeting growth of 8% for the year as
a whole.

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