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Italy turns to China for help in debt crisis

13 September 2011 09:21 (UTC +04:00)

Baku - APA-Economics. Italyâ€™s centre-right government is turning to cash-rich China in the hope that Beijing will help rescue it from financial crisis by making â€œsignificantâ€ purchases of Italian bonds and investments in strategic companies, APA reports quoting Financial Times.

According to Italian officials, Lou Jiwei, chairman of China Investment Corp, one of the worldâ€™s largest sovereign wealth funds, led a delegation to Rome last week for talks with Giulio Tremonti, finance minister, and Italyâ€™s Cassa Depositi e Prestiti, a state-controlled entity that has established an Italian Strategic Fund open to foreign investors. High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article.
Italian officials were in Beijing two weeks ago to meet CIC and Chinaâ€™s State Administration of Foreign Exchange (Safe), which manages the bulk of Chinaâ€™s $3,200bn foreign exchange reserves. Vittorio Grilli, head of treasury, met Chinese investors in Beijing in August. Italian officials said further negotiations were expected to take place soon.

The possibility of Chinese investment comes at a critical moment for Italy, as markets demand increasingly high yields to buy Italian public sector debt, projected to reach 120 per cent of GDP this year, a ratio second only to Greece in the eurozone. High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article.
Cassa Depositi e Prestiti is a founding member of the informal â€œlong-term investors clubâ€ along with similar institutions in France and Germany. In July it launched its Italian strategic fund with an investment of â‚¬4bn that it plans to expand to â‚¬7bn with participation from other sources, including foreign institutional investors.

CIC was set up in 2007 with capital of $200bn and its assets under management now total about $410bn. It says it â€œmaintains a strict commercial orientation and is driven by purely economic and financial interestsâ€ and that it is committed to â€œhigh professional and ethical standards in corporate governance, transparency and accountabilityâ€. Chinaâ€™s embassy in Rome had no immediate comment.