Greece, Hat in Hand, Turns to China for Cash
China has quickly become the go-to country for nations in need. With a $2.4 trillion stash of foreign exchange reserves it’s hard for debt-laden countries to not consider asking it for a helping hand. The US relies on China’s Treasury purchases, and it’s no wonder that Greece is now turning there as well.
From the Financial Times:
“China has both the need to diversify the way it invests those funds, reducing their reliance on US Treasuries, and also an interest in leveraging the influence the money brings to its own rising diplomatic ambitions…
“In a few months in early 2009, unconstrained by any serious public debate at home, the Chinese state committed $50bn in extra funding for the International Monetary fund and $38bn with Hong Kong for an Asian monetary fund.
“About the same time, state interests extended a $25bn loan to cash-strapped Russian oil companies, set aside $30bn for Australian resource companies and offered tens of billions more to various countries or companies in South America, central and south-east Asia to lock up commodities and lay down its marker for future purchases.”
After China has supported its interests with the IMF, Hong Kong, Russia, and Australia, the Greek request also seems perfectly reasonable. And, purchasing Greek bonds would be no skin off China’s back. According to FT, the “€25bn in Greek bonds is equal to about two weeks’ worth of accumulation of foreign exchange reserves in China.” That’s saying something.
See more details in the Financial Times coverage of joining the queue for China cash.