October 1, 2010 / 5:32 AM / in 7 years

China to give "vote of confidence" in Greece

BEIJING (Reuters) - Chinese Premier Wen Jiabao will give a “vote of confidence” in Greece’s debt-hit economy when he visits, and offer support for Europe’s unsteady recovery, underscoring Beijing use of economic strength to win friends.

In an interview with state news agency Xinhua on Friday, Chinese Ambassador to Greece Luo Linquan said Wen’s visit “will again send a clear signal to the world that China has made a vote of confidence in Greece’s economic prospects.”

Greece has been in recession for a second straight year as a result of the debt crisis and austerity measures agreed with the European Union and the IMF in exchange for a 110 billion-euro bailout.

Wen’s trip would show China “is taking practical actions to support Greece, the euro and the European Union to escape from crisis as soon as possible and achieve a steady recovery,” said Luo.

Wen visits Greece from Saturday and will go on to Italy, Belgium and Turkey. He will also meet senior EU officials in Brussels, where China’s central bank chief, Zhou Xiaochuan, is expected to accompany him.

“The timing of this visit is important,” Luo said in the interview in Athens. “It’s an important diplomatic effort to deepen the comprehensive strategic partnership between China and Greece and China and Europe.”

Greek Prime Minister George Papandreou said in a separate interview with Xinhua that his country showed it was committed to meeting its debt obligations and was credible to its creditors.

“If we had wanted to default, we would have done that. That would have been a decision we had made initially. But we made another decision, a decision not to default,” he was quoted as saying on Friday.

With Europe beleaguered by economic woes, its friction with Beijing over human rights has partly subsided, but China’s big trade surplus remains a sore point. Italian textile and shoe makers have complained about competition from Chinese imports.

Wen’s trip appears positioned to counter those worries with promises of more Chinese investment and support for Europe.

China gave its backing earlier this week to efforts by European Union countries to tackle their debt problems.

Vice Foreign Minister Fu Ying said Wen’s visit to Greece would also include unveiling agreements on shipping and ship financing.

The debt strains facing a number of EU states also would be on the agenda when Premier Wen visits Belgium and Italy, Fu said.

“We have taken practical actions to support Europe, especially after some European countries experienced debt crises,” Fu said, citing holding debt and expanding imports.

“In the face of the European debt crisis, China has supported vigorous measures by Europe ... and this policy is unwavering,” she added. “It’s crucially important for China that Europe maintains overall economic stability and overcomes the crisis and restores growth.”

The EU bloc is China’s biggest trade partner. China is the EU’s second-biggest trade partner, behind the United States, and is its biggest source of imports.

In 2009, China trade with the 27 EU member states totalled 263.1 billion euros, and China’s trade surplus was worth 133.1 billion euros.

China has already extended a helping hand to Greece by agreeing to make substantial investments there. It was also a big buyer recently of Spanish government bonds.

Greece is hoping to attract more Chinese investment, and Papandreou said EU and IMF support for his economy meant now was the time to invest.

“Yes we have a support mechanism, but this is only for a while to make Greece a stronger place. So this is why I am saying Greece is a good opportunity now for investment,” he told Xinhua.

Not all of China’s officials have appeared so confident about Europe’s prospects. The sovereign debt strains weighing down the euro zone could deepen, with Greece and Spain particularly at risk, a senior Chinese central banker said last month.

Wen’s visit to Europe is also likely to deal with international pressure on China over its currency exchange policies.

Top EU officials are expected to ask him to deliver on Beijing’s promise to make its exchange rate more flexible, European officials have said.

Editing by Nick Macfie

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