Eurozone seeks bailout funds from China

The head of the eurozone's bailout fund is beginning attempts to persuade China to invest in a scheme to help rescue member countries facing debt crises.

After meeting Chinese leaders, Klaus Regling said there were no formal negotiations and would be no deal now.

It is thought China may pay about 70b euros ($100b) into the fund, which is expected to be boosted to 1tn euros.

Meanwhile, French President Nicolas Sarkozy said debt-ridden Greece's entry to the eurozone was a mistake.

Greece was "not ready" when it joined in 2001, he said, adding that it could be rescued thanks to a new deal on the debt crisis.

European leaders worked into the early hours of Thursday in Brussels to secure an agreement aimed at preventing the crisis from spreading to larger eurozone economies.

The deal triggered a worldwide shares rally.

Beijing has made it clear that it will demand strong guarantees on the safety of any contribution it might make.

With more than $3tn in foreign reserves there are European hopes that China could ride to the rescue.

As the EU's biggest trade partner Beijing would also be hard hit by any downturn in Europe.

But like other investors, China will want guarantees.

Beijing may push for other concessions, such as market economy status - a move that would make it harder for European companies to press trade complaints against Chinese rivals. Any investment will also be fraught with political risk.

China's fund managers have faced criticism after earlier overseas investments soured.

Despite being the world's second economy, more than 200m Chinese live in poverty.

China's leaders won't want to be seen giving "charity" to countries richer than their own.

Regling, who is chief executive of the European Financial Stability Facility (EFSF), said he was not negotiating with China as a potential investor but holding consultations to decide the terms for raising the money.

"Don't expect any precise outcome of our talks," he said, quoted by AFP news agency. "I cannot say today, and it's certainly far too early to say what kind of amounts might be envisaged."

He said China had been a regular buyer of EFSF bonds in the past.

He would present the fund's bonds as a potential commercial investment to China, he said, adding that Beijing regularly needed to find safe investments for its trade surpluses. "I am optimistic that we will have a longer term relationship," he said.

Chinese Vice Finance Minister Zhu Guangyao said there was work still to be done. BBC