THE best way for China to help the European Union out of its sovereign debt crisis is to expand its direct investment in EU countries, rather than buying government bonds, Xinhua said in commentary published Wednesday as Chinese Premier Wen Jiabao left to attend an EU-China summit in Brussels.

The Xinhua commentary also said that China’s investments in Europe are aimed at making a profit and serve no political objective.

“Direct investment from China will no doubt promote economic growth in Europe and create jobs, increase tax income and promote research and development in Europe,” the commentary said, adding that fears over any possible political objectives were groundless.

China has repeatedly voiced support for the EU amid its sovereign debt crisis, stating that it has confidence in the ability of European leaders to resolve the bloc’s problems.

The nation, which has the world’s largest foreign-exchange reserves worth over US$3 trillion, has also been a buyer of European bonds as it tries to diversify its portfolio investments. It has been cautious, however, in divulging any fresh direct investments in Europe.

China’s direct investment in Europe totalled US$10 billion last year, only one-sixth of China’s total overseas investment, Xinhua said.

At least one-fourth of China’s overseas direct investment, which is expected to total between US$1 trillion and US$2 trillion from 2010 to 2020, will be made in Europe if the investment environment is sound, the agency said.

The Xinhua commentary repeated one of China’s key complaints, however, insisting that the EU needs to “improve the environment for Chinese investment, including removing political barriers, expanding market access and helping facilitate those investments.”

Xinhua called for an investment agreement between China and the EU “as soon as possible.”

(SD-Agencies)