MercoPress. South Atlantic News Agency

China calls for global cooperation to solve dollar and euro debt problems

Foreign Affairs Minister Yang Jiechi said China will continue to purchase Euro bonds

China's Foreign Minister called on Friday for more global cooperation to resolve US and Euro area debt problems as stock markets around the world tumbled on fears another financial storm may be developing.

Minister Yang Jiechi, said US debt risks were escalating and he called on Washington to protect dollar investments and adopt “responsible” monetary policies.

China has a major stake in the future of the dollar. Analysts estimate about 70% of its 3.2 trillion in foreign reserves is invested in dollar assets, making it the United States' biggest foreign creditor.

“Europe's debt problems are still developing, and the US sovereign debt default risk is escalating,” Yang told the media in Poland, where he is on an official visit.

“All countries must further increase communication and coordination, push ahead reforms in the global financial system, and improve governance of the global economy.”

World stocks fell for the eighth straight session on Friday on fears that Europe's debt crisis could spin out of control and that the US economy may slide into another recession.

Such a scenario could leave the weight of global economic growth on China, although Beijing's ability to provide fresh stimulus is limited by its need to fight inflation, which reached a three-year high in June.
As it stands, China could account for over a third of world economic growth this year, said Liu Ligang, an ANZ economist.

However despite the Euro area's debt woes, China's foreign minister reiterated Beijing's confidence in Europe, its top trading partner, and the Euro.

“We have bought many Euro bonds in recent years and will continue to support Europe and the euro as always in future,” he said.