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 70bn euros ($100bn) 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. 'Regular buyer' Beijing has made it clear that it will demand strong guarantees on the safety of any contribution it might make. 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. And 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. Mr 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. "We need to wait for the technicalities to be clear and also to carry out serious studies before we can decide on investment," he said, quoted by AFP. "We hope that all these technical and specialised arrangements can be thrashed out at an early date and can be implemented and feasible. That will be very important for the effectiveness" of the fund. The President of the World Bank, Robert Zoellick, has said he believes China will invest in Europe only if there are incentives for it to do so. "I don't think that China will just come in as a white knight to try to provide money just to bail out Europeans," he told the BBC. But investor Jim Rogers said China was prepared to help. "From China's point of view, it's cheap foreign aid. They'll buy goodwill. I guess they'll put up some money," he said on BBC Radio 4's Today programme. The main provisions of Thursday's deal are: Banks must also raise more capital to guard against losses resulting from any future government defaults The framework for the new EFSF bailout fund is to be put in place in November. Germany, as the largest economy in eurozone, is expected to be the largest contributor. Asian markets rose for a second day on Friday and bank stocks in Europe continued to rally, a day after the deal was reached.