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China bailing out EU pure 'media fluff'

26 January 2012, 14:58 CET
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(DAVOS) - Talk that debt-ridden Europe is counting on China to come to its rescue is just "media fluff," members of the political and business elite said Thursday at the Davos forum.

"In my own view... this is media fluff fluff," World Trade Organization chief Pascal Lamy told the World Economic Forum meeting at the Swiss ski village.

"I don't believe one second that there would be negotiations between the Chinese government and the Europeans saying 'we will buy your debt if you do this or if you do that'.

"They don't even do that with the US, they buy US debt without condition. So I don't believe that," added the WTO director-general, referring to Beijing's massive investment in US Treasury bills.

Debt-roiled European leaders have called on China, which has the world's largest foreign exchange reserves of about $3.2 trillion, to invest in a bailout fund.

But China has so far made no firm commitment to provide financial assistance, saying only that it would "continue to support" EU efforts to fight the debt crisis.

Nasdaq chief executive officer Robert Greifeld also dismissed talk of any Chinese rescue funds as pure media speculation.

"We define China as a developing country and we're putting forward the proposition that a developing country should bail out developed Europe.

"That's a little ironic. I would support Pascal who calls it fluff fluff, media speculation that there's going to be a coordinated effort on that.

"I don't see any legitimacy in that at all," he said.

Greifeld also noted that the maths did not add up.

"It's also a quantum issue. If you look at the debt of Italy alone it's $1.9 trillion.

"Large as the reserves are in China, China can't solve the problem even if it wanted to," the Nasdaq chief told the Davos meeting.

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