A strong indication of China`s support came from Chinese Prime Minister Wen Jiabao today, when he said China is willing to help debt-laden Europe by increasing its investment.
"We have been concerned about the difficulties faced by the European economy for a long time and we have repeated our willingness to extend a helping hand and increase our investment," Wen said in his address at the inauguration of the World Economic Forum`s annual meeting at the Chinese city of Dalian.
In return, Wen asked the European Union (EU) to acknowledge China`s status as a market economy and hoped EU leaders would look at Sino-EU relations from a bold and strategic perspective.
"Based on the WTO rules, China`s full market economy status will be recognised by 2016. If EU nations can demonstrate their sincerity several years earlier, it would reflect our friendship," he said.
Wen added that he hopes his scheduled meeting with EU leaders next month will lead to a breakthrough in this regard.
His comments came as Chinese media reported that Beijing is interested in buying Italian debt.
"We support European countries` efforts to handle the debt crisis and believe they will enhance coordination and take collective measures to properly address related issues," Ministry of Foreign Affairs spokeswoman Jiang Yu told reporters here yesterday.
"China hopes to expand cooperation with EU countries in the areas of trade, finance and investment to jointly counter challenges," Jiang said, without confirming whether Chinese and Italian officials were involved in talks over the purchase of Italian bonds.
Her remarks came in the wake of a report by the Financial Times of London which said that Italian officials, led by Finance Minister Giulio Tremonti, arrived in Beijing two weeks ago to discuss the possibility of China buying "substantial quantities" of Italian debt.
An Italian Treasury spokesman confirmed the talks.
Accounting for 120 per cent of its GDP, the size of Italy`s debt now stands at 1.9 trillion euros (USD 2.59 trillion), which is more than Spain, Greece, Ireland and Portugal combined and accounts for 23 per cent of all euro zone sovereign debt, China`s state-run Global Times reported.
It is not known how much Italian debt China plans to buy.
Wu Xiaoling, a former deputy governor of the People`s Bank of China, said in a forum that helping Italy would be positive for both China and the world.
Yuan Gangming, an economist with the Chinese Academy of Social Sciences, told the Global Times that the possibility of China purchasing Italian bonds is quite high, given the mutually beneficial outcomes of the move.
"China`s excessive investment in US Treasuries has made it vulnerable to US economic turbulence and caused it to lose its basic rights as the largest creditor. Under such conditions, China urgently needs to diversify its foreign reserve investments so as to reduce the proportion and impact of US debts," Yuan said.