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China's Wen offers to buy Greek debt

ATHENS -- China offered on Saturday to buy Greek government bonds when Athens resumes issuing, in a show of support for the country whose debt burden pushed the eurozone into crisis and required an international bailout.

Premier Wen Jiabao made the offer at the start of a two-day visit to Greece, his first stop on a tour of Europe, and also said he wanted to boost shipping and trade ties with Athens, underscoring Beijing's use of economic strength to win friends.

“With its foreign exchange reserve, China has already bought and is holding Greek bonds and will keep a positive stance in participating and buying bonds that Greece will issue,” Wen said, speaking through an interpreter.

“China will undertake a great effort to support eurozone countries and Greece to overcome the crisis.”

Wen and his Greek counterpart George Papandreou said in a statement the world's nations need to coordinate their economic policies for global recovery to find a sure footing.

“The global economy shows signs of gradual recovery but many uncertainties remain,” the two leaders said in the statement, issued on Saturday by Papandreou's office after the two men met in Athens.

In addition to seeing economic opportunities in Greece, China may calculate its support of a struggling European country will help deflect international criticism of its trade policies and its refusal to let its yuan currency appreciate sharply.

Wen did not specify how much Greek debt China would be willing to buy or which Chinese entities would buy the bonds.

Chinese state entities have been generally conservative about investing in foreign financial markets and the Chinese government faces domestic political criticism over losses incurred by these entities during the global financial crisis.

High Borrowing Costs

A senior Greek government official said Wen made clear his offer concerned buying bonds only when the country returned to markets.

Greece, which is currently funded through a 110 billion euro (US$150 billion) EU/IMF bailout, is only issuing short-term T-bills for the time being.

Since the true scale of its debt burden emerged late last year, investors have shunned its bonds. The yield they demand to hold 10-year Greek debt has shot up to 10 percent, compared with just 2.3 percent for similar bonds from the eurozone's biggest economy Germany, making it too expensive for Greece to seek long-term funding in international markets.

It has said it wants to return to markets sometime next year to sell longer-term debt.

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 China's Wen offers to buy Greek debt 
China's Premier Wen Jiabao is congratulated by his Greek counterpart George Papandreou, left, and President of Greek Parliament Philippos Petsalnikos, right, after receiving the gold medal of the Parliament in Athens on Sunday, Oct. 3. (AFP)

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