CHINA declares - we are not 'saviours' of Europe

Wen Jiabao - Chinese Prime Minister

CHINA - dashed any hope of a bailout of the euro yesterday saying it was not the 'saviour' of Europe. Beijing said, it will do what it can to help a friend in need, state-run news agency Xinhua said in a commentary on Sunday.The head of Europe's rescue fund sought to entice China on Saturday to invest in the facility by saying investors may be protected against a fifth of initial losses and that bonds could eventually be sold in yuan if Beijing desires.

Though China has expressed confidence that Europe can survive its crisis, it has made no public offer to buy more European government debt.

Xinhua, in an English-language commentary, said China could not stand by while its largest trading partner foundered.

"Beijing's good-will gesture is a good response to those who see China as a threatening rival to Europe. Despite differences in politics, economy and culture, China and the EU are still good friends and partners," it wrote.

"However, amid such an unprecedented crisis in Europe, China can neither take up the role as a saviour to the Europeans, nor provide a 'cure' for the European malaise," Xinhua added.

"Obviously, it is up to the European countries themselves to tackle their financial problems. But China can do within its capacity to help as a friend."

China's pile of $3.2 trillion (1.98 trillion pounds) in foreign exchange reserves, the biggest in the world, keeps growing thanks to trade surpluses and capital inflows.

Analysts estimate that China holds about a quarter of its foreign exchange in euro assets and there are few other places for it to park investments of such a scale.