China eyeing wholesale purchase of Italy?

With Italy second only to Greece in the Eurozone in terms of its debt-to-GDP ratio, the Italian government is eyeing China as a possible source of cash to alleviate its budget deficit.

According to Italian officials, Lou Jiwei, chairman of China Investment Corp, one of the world's largest sovereign wealth funds, led a delegation to Rome last week. He met with finance minister Giulio Tremonti,  and Italy's Cassa Depositi e Prestiti, a state-controlled entity that has established an Italian Strategic Fund open to foreign investors, reports the Financial Times.Italian officials were in Beijing two weeks ago to meet CIC and China's State Administration of Foreign Exchange (Safe), which manages the bulk of China's $3,200bn foreign exchange reserves. Vittorio Grilli, head of the treasury, met Chinese investors in Beijing in August. Italian officials said further negotiations were expected to take place soon.How much of Italy's 1,900 billion euro of debt is already in China’s possession is not immediately clear. The Financial Times cites Italian officials as saying that Beijing holds about four per cent.The Eurozone is undergoing a financial crisis, with several members with overreaching national debts having turned to their richer neighbors for bailouts. The EU has demanded austerity measures and privatization of state funds in return for emergency loans. The measures have provoked public unrest in several countries, including Greece and Italy.Despite all the cash poured into the crippled European economies, the risk of default and a chain reaction jeopardizing financial institutions is still looming over Europe.