China's CIC brushes aside Merkel investment plea

Mon Feb 13, 2012 6:21am EST
 
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BEIJING (Reuters) - The head of China's $410 billion sovereign wealth fund CIC brushed aside a call by German Chancellor Angela Merkel to buy European government debt, saying such investments were "difficult" for long-term investors.

In comments ahead of a China-EU summit starting on Tuesday, Lou Jiwei, chairman of China Investment Corp (CIC), said any fresh injection of funds into Europe would be in industrial and other real assets, not government bonds.

His comments struck a sharper tone than a commentary in the Communist Party mouthpiece, the People's Daily, which sought to reassure the European Union that China had no intention to "buy up Europe."

Speaking at a forum in Beijing, Lou said Merkel had asked CIC and other long-term investors to buy European government debt when she visited Beijing earlier this month.

"For European bonds like the government bonds of Italy and Spain, only central banks with certain responsibilities can invest," he said.

"But it's more difficult for long-term investors like us to make (such) investments," he told the annual meeting of China Economists 50 Forum, a club of government officials and economists.

"Investment opportunities may lie in areas like infrastructure and industrial projects, and these projects can help economic recovery," he said.

A central bank adviser echoed Lou's harder line on buying European government debt.

"We may be poor, but we aren't stupid," Xia Bin told reporters on the sideline of the forum. "We must follow commercial principles in making such investments. That means we want returns."   Continued...