Chinese Vice Premier Li Keqiang has been touring Europe the past week to unlock part of its estimated $2.85 trillion currency reserves to buy problematic European bonds.

In Spain, Li promised not only to keep buying Spanish bonds but also took along a flurry of business deals worth more than $7 billion. This public display of support seems to have worked: Madrid Thursday sold more bonds at a better price than anticipated, in a move that has soothed European leaders.

China has over the past year developed into a major financial stabilizer for Europe. The Wall Street Journal recently estimated that China may hold $900 billion in eurozone sovereign debt -- nearly 10 percent of the total issued.

"This is a sign of trust in the eurozone, that the euro is stable and that Europe remains an interesting place to invest in," German Finance Minister Wolfgang Schaeuble said Thursday in Berlin. "But in the end Europe has to win back confidence not only from state investors, but also from the market."

China may very well believe in the eurozone, as Schaeuble likes to see it, but it does so out of self-interest.

After all the European Union, and not the United States, is the biggest importer of Chinese goods -- so a fledgling euro and a weak European economy would damage China's export-driven economy.

Moreover, in a move that increasingly worries U.S. observers, Beijing is moving from U.S. investments to diversify its currency holdings away from the dollar.

A third Chinese interest, and one that has been speculated by concerned security officials in the United States, could be the goal to gain political clout in Europe.

"There is the underlying concern that the Chinese buy themselves into aspects of the European economy that concern our security sphere," Eberhard Sandschneider, China expert at the German Council on Foreign Relations, told United Press International in a telephone interview. "This hasn't happened yet. None of the state-owned funds have tried to win political influence. Of course they might down the road but that's not likely at the moment."

Schaeuble also brushed aside those concerns.

"Believing that buying a few billion euros in bonds can get you political influence is wrong," he told the foreign press corps during talks in the Finance Ministry in Berlin.

Sandschneider added that China's investment expansion course can be seen as quite normal given the country's rapidly increasing economic and political standing in the world.

"We've had similar debates in the past -- in the 1980s, Japan was accused of being in the process to buy up the West, so let's take China's investment with a grain of salt. Its funds are there to make money and to be invested all over the world," he said. "We would probably do the same if we still had the cash."

earlier related report
US, EU firms complain China not doing enough on IPR
Beijing (AFP) Jan 14, 2011 - US and European business leaders said Friday that Beijing needed to do more to respect intellectual property rights, as China's commerce minister admitted enforcement of copyright laws could improve.

The comments from the foreign executives came at a government forum organised ahead of Chinese President Hu Jintao's visit to the United States next week, during which copyright infringement is likely to be discussed.

"Despite improvement, inconsistent and ineffective IPR enforcement is still a serious concern for our members," the president of the American Chamber of Commerce in China (AmCham), Ted Dean, told the audience.

"There is more work to be done, and we are eager to engage in dialogue... to address these issues together."

Intellectual property rights are widely flouted in China, which is home to the biggest counterfeit and piracy market in the world.

The United States and the European Union have repeatedly called on China to crack down on intellectual property theft. US Trade Representative Ron Kirk said last month that "concrete and measurable results" were needed.

Beijing said this week that it had detained more than 4,000 people suspected of violating intellectual property rights since November as part of a six-month nationwide crackdown on fake goods launched in late October.

"We admit our law enforcement still needs to be strengthened," said the commerce minister, Chen Deming.

"China's firm determination to protect intellectual property rights is unquestionable and unshakeable," he added, assuring foreign firms that the government crackdown would be extended.

EU Chamber of Commerce vice president Davide Cucino said members had ranked IPR protection as one of the top three obstacles to doing business in China, calling for more dialogue between foreign firms and Chinese government bodies.

"Counterfeit products encroach upon our market shares, depress our profitability and our healthy business growth, and hurt the reputation of our brands," said Werner Geissler, vice chairman of global operations at Procter & Gamble.

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