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Eurozone downgrades 'won't deter' investment

By Wei Tian (China Daily)

14:19, February 15, 2012

Premier Wen Jiabao, President of the European Council Herman Van Rompuy (left) and President of the European Commission Jose Manuel Barroso attend the China-EU Summit at the Great Hall of the People in Beijing on Tuesday. Experts say the problems in the eurozone have provided China with an opportunity to lend a helping hand. (China Daily Photo)

BEIJING - Though another wide-ranging ratings downgrade for eurozone countries is further dampening investor confidence, it also offers opportunities for China to participate in Europe's rescue plan, economists said.

Moody's Investor's Service on Monday cut its ratings on six European nations including Italy, Spain and Portugal. It also warned another three - Austria, France and the United Kingdom - that their top ratings could be at risk, citing the weakening prospects for an overhaul in Europe.

The downgrade was the latest such move by a major global ratings agency. Standard & Poor's and Fitch Ratings each cut ratings for the eurozone last month.

Analysts said the move wouldn't affect China's possible investment in Europe, because sovereign credit ratings are a guideline for commercial investors but have little reference value for actions by a country.

"The problems in the eurozone have helped sustain China's determination to lend a helping hand, because the nation sees them as an opportunity to take part in the reconstruction of global financial institutions," said Yuan Gangming, an economist with the Chinese Academy of Social Sciences, a top government think tank.

Yuan said China should take the opportunity to secure a larger position and more influence if it invests in the European Financial Stability Facility.

Premier Wen Jiabao said last month that China was willing to "involve itself more" in efforts to resolve Europe's debt crisis, but he also called on the Europeans to create an "objective and positive environment" and provide China with "proper investment products".

Yuan said that 40 billion euros ($52.8 billion) to 50 billion euros would be an appropriate amount for China to invest in the EFSF initially, and more capital would follow after China's move stabilized market confidence.

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