China premier pledges to hold on to euro zone debt

China promised the European Union on Monday it would hold on to its euro zone debt, Chinese state media reported, saying the Greek debt crisis was Beijing’s problem too.

The comments by China’s Premier Li Keqiang just before a China-EU summit in Brussels appeared aimed at soothing European financial markets that took fright at the growing risk that Greece will leave the euro.

Li told European Parliament President Martin Schulz that China would be “a long-term, responsible holder of euro debt”, according to state television’s main evening news. Although not directly quoting Li, state media said he told Schulz that “this is not only a European problem, but relates to China-Europe relations too and is a problem for the world.”

China and Belgium signed deals worth more than 18 billion euros ($20 billion) on Monday, state news agency Xinhua said, without providing details.

Li is due to address business leaders later on Monday and hold his first summit with the new heads of the European Commission, Jean-Claude Juncker, and the European Council of EU leaders, Donald Tusk.

The European Union has been aiming to broaden its relations with China at the summit, hoping for Chinese investment in Europe’s new infrastructure fund and support for a global climate deal.

Though Greece will likely further be discussed with Juncker and Tusk, the main focus of the summit it to try to move Sino-European ties beyond trade as China seeks a bigger role in international affairs.

An expected multi-billion euro pledge by Beijing to invest in European telecoms infrastructure, reported first by Reuters earlier this month, heads the agenda.

While the amount is still to be decided, the pledge will mark the latest step in China’s efforts to shape global economic governance and follows decisions by EU governments to join the Chinese-led Asian Infrastructure Investment Bank (AIIB) in defiance of Washington.

“We expect Li to announce a very important contribution to the infrastructure plan,” Emma Marcegaglia, the president of Business Europe, which represents 39 industry and employer groups in 33 countries. “It’s a sign of the better ties.”

Underscoring an improving relationship, China’s Li is due to hold a news conference at the EU summit for the first time.

In the past, the unwillingness of senior Chinese officials to hold news conferences following high-level meetings in Brussels was a source of conflict because the European Union prides itself on its openness to the media.

Monday’s summit is also expected to be the occasion for China to boost its environmental credentials and voice solidarity with the European Union’s push for a new global deal on climate change at U.N. talks late this year hosted by France.

China, the world’s biggest polluter, has shifted its stance since the U.N. summit of 2009, the last attempt to reach a climate deal, as it faces social unrest because of pollution.

Beijing had said it will submit its plans for emissions reduction to the United Nations in the first half of this year.

People familiar with the issue in both China and the European Union say Monday could be the day Beijing chooses, although it is unclear if the announcement will be in Brussels.

Text: Reuters by By Robin Emmott and Ben Blanchard  29-06-2015

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