China willing to buy more Spanish debt: Wen

(BEIJING) - Chinese Premier Wen Jiabao told Spain's visiting prime minister Tuesday that Beijing is ready to buy more Spanish public debt, voicing confidence in Europe's recovery.

Prime Minister Jose Luis Rodriguez Zapatero, who will also visit Singapore, is seeking new investments to shore up Spain's economy as it tries to avoid a crisis in refinancing and raising new debt.

The European Union and the International Monetary Fund bailed out Ireland and Greece last year and have now offered to help Portugal. Spain's economy is as large as that of Ireland, Greece and Portugal combined.

"China is willing to continue to buy the national debt of Spain," Wen said in comments released by the foreign ministry.

"China is a responsible and long-term investor in the European financial market, and supports the relief measures by the EU and the International Monetary Fund," the Chinese premier said.

"I am convinced that Europe will certainly realise its stable economic and social development."

A statement from Zapatero's office in Madrid said Wen also "promised during his meeting with the Spanish prime minister to invest in the restructuring of the savings banks."

Spain's regional savings banks, considered the weak link in the country's financial system, are still struggling under the weight of loans that turned sour after the 2008 property bubble collapse.

The government has introduced stringent new rules on their capital levels so as to regain credibility on world financial markets.

Zapatero said China's support had helped to "strengthen Spain's confidence and ability to overcome difficulties" and had been an asset to Europe's overall economic stability.

His Socialist government has slashed spending and raised taxes to rein in Spain's ballooning public deficit, and China's help could bolster that effort.

Chinese Vice Premier Li Keqiang reportedly offered to buy about 6.0 billion euros worth of Spanish public debt during a visit to Spain in January, though Beijing has never revealed the total amount of its investment.

Concerns that eurozone debt troubles could spread to Spain pushed bond rates sharply higher last year, adding to the costs of servicing the country's sovereign debt.

But such fears appear to have eased since then as Madrid strengthened bank balance sheets, cut spending and pursued economic reforms.

In his meetings with both Wen and Li Keqiang on Tuesday, Zapatero also discussed EU-China relations, the crisis in Japan, the situation in Libya and the next G20 summit, the statement from Zapatero's office said.

"Chinese leaders also presented Zapatero with an analysis of China's relations with North Korea and South Korea," it said.

The Spanish prime minister was due to give a press conference in Beijing on Wednesday before heading to Singapore, where he will hold talks with Prime Minister Lee Hsien Loong and investors.

Zapatero will then head back to China for the Boao Forum for Asia, an annual conference bringing together current and past government leaders, top businessmen and academics, before heading home on Friday.