China's largest sovereign wealth fund, China Invest Corp. (CIC) is "very concerned" about market fluctuations in the eurozone. Gao Xiqing, president of CIC, said that he would keep the current investment level in Europe, no more, no less.
The official China news agency Xinhua said "CIC is very concerned about the short-term market fluctuations and threatened euro zone stability."
Added to these comments, we have the statement by China's State Administration of Foreign Exchange (SAFE), which said that a report in the Financial Times -- that it was reviewing its holdings in euro zone assets -- was "groundless." This comment was sufficient to trigger a rally in the euro and a rally in the markets across the globe. SAFE manages China's $2,500 billion in foreign exchange reserves.
The concern across the globe is whether central bankers will reduce the proportion of euros held in reserve and move added reserves into the U.S. dollar. Any such move would put added pressure on the euro. China, with the largest sovereign reserves, holds the key. At the moment they want to help stabilize the eurozone to protect the assets they already have there. Going forward, we must look at the actual investment numbers from CIC and SAFE. Much of this is kept secret, so data will be hard to come by.