China says cannot use reserves to rescue Europe

Updated: 2011-12-02 18:04


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BEIJING- China cannot use its foreign exchange reserves of about $3.2 trillion to rescue other countries, a senior diplomat said on Friday.

"The argument that China should rescue Europe does not stand, as reserves are not managed that way," said Vice-Foreign Minister Fu Ying at the Lanting forum held by the Ministry of Foreign Affairs.

"China is not absent from the international efforts to rescue Europe; it has been a positive and healthy participant," Fu said.

Since the outbreak of the European financial crisis, China has dispatched more than 30 procurement delegations to Europe, leading to the country's growing imports from the continent, Fu said.

Fu added that there are many misunderstandings about the use of China's foreign reserves. "Foreign reserves aren't domestic income or money that can be disposed of by the premier or finance minister."

"Foreign reserves are akin to savings, and their liquidity should be ensured," Fu said.

She said China learned a lesson from the Asian financial crisis in late 1990s of how important foreign reserves are to a nation.

"Reserves cannot be used domestically to alleviate poverty or taken abroad for development support," Fu said.

She stressed that the way the foreign reserves are managed should be in line with the principles of "safety, liquidity and proper profitability."  

"China's purchases of European bonds, International Monetary Fund bonds and US bonds are also based on those principles," Fu said.

Initiated by the Chinese Foreign Ministry last December, the Lanting Forum is a platform for Chinese officials, scholars and social groups to discuss international issues and China's foreign policy.