The country which has so far been doubling down on its losses in European bond exposure, much to the amusement of cynical onlookers, has finally disclosed that Europe is the locus of Chinese vital self interests, and that should Europe go down, one very major domino would be the implosion of China itself. Per Reuters: "China's "vital" interests are at stake if Europe cannot resolve its debt crisis, the Chinese Foreign Ministry said on Friday as it voiced concern about the economic problems of its biggest trading partner. At a media briefing ahead of Chinese Premier Wen Jiabao's visit to Europe next week, Vice Foreign Minister Fu Ying made plain that China had tried to help Europe overcome its troubles by buying more European debt and encouraging bilateral trade..."Whether the European economy can recover and whether some European economies can overcome their hardships and escape crisis, is vitally important for us," Fu said. "China has consistently been quite concerned with the state of the European economy," she said." And just like every time before when China has tripled and quadrupled, and now quintupled, on Greek, Portuguese and other debt, so this time will be no different as merely loading up an insolvent entity with even more leverage does nothing but shorten the half life of each additional "bailout." When Greece blows up, forget the other European countries: keep a close eye on China.
With Greece on the verge of a debt default, investors will focus on whether China promises to buy even more debt from beleaguered European nations including Greece, and increase its investment in the region.
China is a natural prospective investor in European assets and government debt because it has $3.05 trillion in foreign currency reserves, the world's largest.
With a quarter of the reserves estimated to be invested in euro-denominated assets, it is clearly in Beijing's interest to help Europe survive its debt turmoil.
"We have supported other countries, especially European countries, in their efforts to surmount the financial crisis," Fu said. "We have, for example, increased holdings of euro debt and promoted China-European Union trade."
Beijing has said in the past that it has bought Greek debt, but has never revealed the size of its investment.
When in doubt, repeat a lie:
Since euro zone debt worries first rippled through markets last year, China has repeatedly said that it has confidence in the single-currency region.
"We have hoped to help euro zone countries in overcoming the crisis, and this is also a measure that is beneficial to China's own economic development," Fu said. But mirroring deteriorating market confidence on Europe, China's central bank published a report this week saying the economic bloc risked worsening its problems if it did not contain debt levels.
Well at least the global Keynesian time bomb is now loaded in such a way that the smallest economy collapsing will literally destroy the central planning cartel of the three biggest economic centers of the world. Hopefully this means that the great reset is finally in sight, now that a bunch of Greek politicians have 5 days in which to finally decide the fate of the failed Bismarckian-Keynesian experiment.