By OWEN FLETCHER
BEIJING?China has been increasing its holdings of European Union countries' debt, including Spanish government debt, since the outbreak of the European sovereign debt crisis, Chinese Vice Commerce Minister Gao Hucheng said in a statement.
China's latest comments of reassurance for Spain and other European countries amid the euro-zone crisis come as political and corporate leaders increasingly see China as a source of capital. China's foreign-exchange reserves are by far the world's largest, totaling $2.648 trillion at the end of September.
China maintains confidence in European and Spanish financial markets and believes they will overcome the current crisis, Mr. Gao said in the statement on the Ministry of Commerce's website Thursday.
"We will continue to buy debt and work together with Spain," said Mr. Gao, who is accompanying Chinese Vice Premier Li Keqiang on a visit to Spain and other European countries.
The exact amount of bonds China buys "depends on the timing and volume of issuances by the Spanish government, as well as the bonds' prices in the primary and secondary markets," Mr. Gao said.
Spanish daily El Pais on Thursday cited Spanish government sources as saying China has committed to buy about ?6 billion ($7.89 billion) worth of Spanish sovereign debt. The report couldn't be immediately confirmed.
People's Bank of China Vice Governor Yi Gang, also in Spain, said China is willing to discuss with Europe the diversification of international reserve currencies, Xinhua News Agency reported.
It is also willing to discuss with Europe the formation of a stable reserve currency system in which the supply and total quantity of reserve currency are orderly and controllable, Mr. Yi said. The report didn't elaborate on the comment. China is keen to diversify more of its foreign-exchange reserves away from U.S. dollar-denominated assets.
"Reserve managers around the world are looking to buy assets in currencies that are new to them, like the South Korean won and the Australian dollar," said Neil Mellor, a currencies analyst at Bank of New York Mellon in London. "The problem is that there are very few markets deep enough to take the amounts that China wants to dump."
Mr. Yi reiterated China will adopt a "prudent" monetary policy to allow China's monetary conditions to return to normal levels, Xinhua said. China will also continue to improve the yuan's exchange rate formation mechanism and will steadily promote market-oriented interest rate reform, he said.
Among key economic issues currently are how China can use macroeconomic policies to address inflationary pressures, and unconventional monetary policy measures adopted by the European Central Bank, Mr. Yi said.
The PBOC official added that Chinese and European financial institutions can strengthen cooperation in areas including increasing capital strength and improving the risk-sharing system, and should explore developing financial instruments and hedging devices that meet the needs of the Chinese and European markets, Xinhua reported.
--Aaron Back in Beijing, Katie Martin in London and Jean Yung in Madrid contributed to this article.
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