Alexander F. Yuan/AP - European Council President Herman Van Rompuy reacts as he walks past a Chinese national flag before giving a speech on the Euro currency in Beijing on Feb. 15.
BEIJING — The ritual is now familiar. European officials meet with Chinese leaders seeking assurances of help for the continent’s debt crisis. During smiling photo ops, the Chinese respond with the requisite promises to assist.
China will get involved “more deeply,” Premier Wen Jiabao said in mid-February at a meeting in Beijing with a top-level European Union delegation. China will support the E.U. “in its own way,” Vice President Xi Jinping said during a Feb. 20 visit to Ireland.
But behind those vague promises is reluctance by China to move too quickly and put the country’s vast foreign exchange reserve holdings at risk. At work is a cold-headed calculation — Chinese economic policymakers do not see a consensus in Europe as to what to do, and they do not think buying up euros, or more bonds of indebted E.U. countries, is a particularly safe bet.
China joined with other leading economies at the Group of 20 meeting in Mexico last weekend to insist that euro-zone countries do more themselves, and erect a stronger firewall, before expecting any outside help, delaying any decision until April.
The Chinese government directly holds about $1.132 trillion in U.S. Treasury securities, making it the largest foreign holder of U.S. debt. China does not reveal exactly how much euro debt it holds, but the amount is believed to be far less than U.S. Treasury securities.
“China is a long-term investor in Europe’s sovereign debt market,” Wen said in June at a news conference with the Hungarian prime minister, Viktor Orban. “In recent years we have increased by quite a big margin our holdings of government bonds.”
Analysts here mention another reason for China’s hesitance to play a bigger role: The country does not want to be seen as the world’s financial rescuer, particularly at a time when growth at home is expected to slow down. And some have said any help should come with countervailing conditions, such as demanding that European countries relax restrictions on high-tech exports to China.
For now, Chinese leaders seem to prefer an alternative approach — encouraging private Chinese companies and state-owned firms to help Europe by swooping in to purchase cheap European assets, whether factories or fashion outlets, as part of the Chinese government’s “go global” investment strategy.
“Investing in Europe’s real economy is safer than buying euro bonds,” said Li Zhongmin, a researcher with the Institute of World Economy and Politics, part of the Chinese Academy of Social Sciences. “Right now, the timing is good for China to invest in Europe because of the relatively low prices.”
China’s direct investment in Europe surged in 2011 over 2010, although the 2011 figures vary, depending on the source. In its Dragon Index, which monitors Chinese investment, A Capital, a private equity fund with offices in France and China, found that Europe accounted for 34 percent of China’s mergers and acquisitions in 2011, up from 10 percent a year earlier.
China’s Commerce Ministry counts something different, but a spokesman made the same point: China’s investments in Europe more than doubled in 2011.
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