Will China Bail Out Italy?

From the BBC News:

China's largest sovereign wealth fund is considering buying Italian assets, according to a report in the Financial Times.
China Investment Corporation (CIC) and Italian officials have held meetings in the last month, the report said.
CIC is wholly owned by the Chinese government and has an estimated $400bn (£250bn) in assets.
The report comes at a time when the cost of borrowing for the Italian government has reached record highs.
"When you introduce a large buyer like China, it brings down the interest rate," Mark Young of Fitch Ratings told the BBC.
"They can then fund their economic growth more easily," he added.
Strategic stakes? The FT reported that Lou Jiwei, the chairman of China Investment Corporation, had met Italian finance minister Giulio Tremonti and other officials in Rome last week.
It added that Italian officials had visited Beijing the week before, and negotiations had also taken place in August.
As well as buying bonds, the FT said the talks also covered investments in "strategic" Italian companies.
According to the newspaper, Italian officials said further negotiations were expected to take place soon.
Italy has a national debt of 120% of gross domestic product (GDP) and accounts for 23% of all eurozone sovereign debt.
According to the International Monetary Fund, it will need to raise funds equalling as much as 20% of its GDP in 2012 to refinance its debt.

China, the world's best and largest nation of savers, is buying strategic assets throughout the world.  These purchases include; copper mines, gold mines, investments in oilsands and other oil deposits, and a variety of sovereign debt from heavily indebted nations like Italy and the US.  

How long will it be until it becomes the largest economy in the world?

According to my calculations, we could see China surpassing the US by 2018, if the US slips into a Japanese style malaise or something worse. 

Surely the old proverb is true:

The rich rules over the poor, And the borrower becomes the lender's slave.
                                    Proverbs 22:7  NASB


  1. It seems it won't be necessary, as the EU is simply able to wish things away. Just look at Greece today as an example. This whole mess could drag out for a loooong time to come...


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