Europeans question Chinese motives after bond sales

Chinese Premier Wen Jiabao gives a statement during the opening ceremony of the first EU-China High-Level Cultural Forum at the EU headquarters in Brussels.

TEXT OF STORY

JEREMY HOBSON: Well, China is also trying to warm up its relationship with European countries although perhaps in a different way. Last week, Beijing reportedly purchased a substantial amount of bonds from Portugal and Spain -- as those countries cope with the ongoing debt crisis. But the move has left some Europeans wondering what exactly the Chinese are up to.

Marketplace's Stephen Beard joins us now live from London with more. Hi Stephen.

STEPHEN BEARD: Hello Jeremy.

HOBSON: Do we know exactly how much the Chinese put up for these bonds?

BEARD: No, not exactly. The Chinese are particularly inscrutable when it comes to their currency reserves, but there are strong indications that they were a secret buyer in the Portuguese bonds sale and the Spanish bonds sale last week. We may be talking a total of several billion dollars here -- nothing to the Chinese. But it does seem to have helped these bond sales, both went well. And that has temporarily at least, eased the euro zone debt crisis.

HOBSON: And I gather there are some concerns in Europe about why China's being so nice all of a sudden?

BEARD: Indeed. Nobody believes the Chinese were acting out of the goodness of their hearts. I mean one theory is they're trying to soften up the Europeans at their time of need to get them to lift the EU embargo on arms sale to China. This was imposed after the Tiananmen Square Massacre in 1989. The Chinese regard this embargo as humiliating, the U.S. is still very much opposed to lifting the embargo, but it's worth noting that the European Foreign Policy Chief has recently and, quite suddenly changed tact and said the embargo is bad for EU-China relations. So maybe money -- Chinese money -- is beginning to talk.

HOBSON: Marketplace's Stephen Beard in London, thanks.

BEARD: OK Jeremy.

About the author

Stephen Beard is the European bureau chief and provides daily coverage of Europe’s business and economic developments for the entire Marketplace portfolio.

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