So far there have been confusing signals of how far China intends to help Europe in its days of need, as Italy’s €1.9 trillion debts threatens to derail the Eurozone.

There have been rumours that $100 million could be made available if certain conditions are met, but the message has also been that Europe must sort itself out rather than rely on China’s $3.2tr of foreign reserves.

China appears to be unwilling  to hand over the proceeds of its impressive growth over recent years easily, and stringent risk assessments will be put in place that will dictate how much money is used to cushion the Eurozone. Even though a secure Europe is a necessity for China to prolong its growing economy due to the amount of exports that are consumed across Europe.

“China is not likely to be the ‘red knight’ saving Europe. China is, like all investors looking for safety on their investments,” said Jonas Parello Plesner, a senior policy fellow with the European Council of Foreign Relations.

“And China will  look for options that are given the triple AAA stamp. In that sense, the EFSF is an option for China and they are already contributing to the fund. Yet they are a large step away from putting a smaller stake in this facility to making a mass-scale move into leveraging the fund. China is like other investors,  worried about what the end of the Greek conundrum and Italian masquerade will mean for the safety and security of the European rescue plans. That they will factor into an investment as well. Yet China all the time has to invest its currency reserves and some of it will go into euro holdings. In that sense, China is making a virtue of a necessity by calling it a helping hand.”

Previously, bonds in Ireland and Portugal have been purchased that have significantly been reduced in value, this has caused wariness in investing more in Europe.  In July 2010, promises were made to buy $505m worth of Spanish bonds, according to a report in the China Daily, but it is thought that China fell short of that amount.

The hostility towards investing in Europe has also been highlighted by the trend of buying more US Treasury bonds, official figures reveal that in 2010 China increased their holdings in treasury bills to $1.112tr - up by 32%, and its is believed they hold a similar amount now.

Gold mines have also become desirable assets to the Chinese government, placing the Eurozone further down the list of appealing ways to spend its currency reserves.

Although in dealing with the European situation China may have to look inwardly as well as outwardly, as due the well known losses made in Europe and on Wall Street stocks, it will not be an easy sell to the Chinese population to move more of its foreign reserves overseas.

If Germany can veto the unleashing of the deep pocketed ECB to save the euro and its independent  Bundesbank can slake a bailout deal at the G20 summit, Chinese citizens can only ask why should they be responsible for paying off Europe’s woes.

The moral question is that is it the right thing to do to bail out profligate European countries, a question that sticks in the throats of the Chinese who will be funding an economic zone that has higher living standards, and better pension rights than themselves.

Jonas Parello Plesner added: “China’s currency reserves are also their pension fund for an ageing population. There is a large awareness also in the population on this in China. Many Chinese feel that they have already burned their fingers on investing too heavily in dollars and in Wall Street stocks that plummeted in 2008.”

In response to the banking crises of that year, a 4tr Yuan stimulus package was announced that had arrived through a credit boom - but all that cheap land, labour and capital could, in theory, return to haunt them.

It is debatable just how fragile this has made China, but it has provoked the government into promoting a different economical model. Domestic demand is now a priority in the latest five-year plan, where significant increases in the minimum wage have been targeted to stimulate consumer spending.

They may feel that surpluses would represent better value for money being used at home in comparison to junk European bank bonds. As investing in information technology, clean energy, environmental protection and scientific research are also planned as well as creating spending power.

Despite any worries that China may have, they have still been strategically investing in European companies, and have hoovered up public infrastructure contracts.

This has raised European eyebrows who are sceptical of Chinese influence during this unstable period. However from China’s point of view they are damned if the they invest in Europe, and they are damned if they do not.

The European Council of Foreign Relations’ (ECFR) paper The Scramble for Europe, suggests that China’s policy in Europe is tactically predatory. Especially as its investment havens have been aimed towards the South, Central and Eastern Europe, who are more in need of  Chinese investment. This replicates a tactic successfully executed in Africa and the Middle East,  in awarding contracts to individual countries while ignoring regional institutions.

For example, the study concludes that 30% of China’s  investments and trade facilitations reside in Portugal, Italy, Greece and Spain. With a further 10 per cent in Central and Eastern Europe, figures that represent a disparity in investment policy in Europe.

There has been three major Chinese acquisitions this year, a Spanish oil company’s Brazilian holdings, a Hungarian chemical company and a major Norwegian silicon unit.

The amount of investment in these three companies alone will take China’s direct investment holdings over the $1.3bn total aggregate that China held only five years ago. This confirms a more aggressive line in takeovers of European companies, in comparison to the less enthusiastic view of buying EFSF bonds.

A third way in which China has shown strength in Europe is public infrastructure contracts - The Scramble for Europecites Serbia accepting financing from the Chinese Development Bank for a bridge over the Danube. Another example was the Polish government’s contract with a Chinese state owned enterprise COVAC, who bid 50% lower than what was budgeted to be received for the planned Warsaw-Lodz highway.

COVAC then bought Chinese labour over for the project, then eventually pulling out for an unofficial reason of labour and immigration issues. The ECFR argued that this could be attempted in the future with low prices being offered for public contracts, then accompanied by cheap labour keeping costs down.

What angers Europe about this is the lack of reciprocal access to Chinese markets, knowing they will rarely win contracts as China has yet to sign up to the WTO’s regulatory agreement on general procurement.

Despite the Trade Commissioner Karl De Gucht’s protestations that the Commission is making inroads in the Chinese advantage, with dialogue between the two parties putting a stop to indigenous innovation practices in procurement. There remains a significant imbalance in market access and competitive fairness that has been politically fractious.

“The biggest problem that this could cause is protectionism which in the short term view politically can happen in this situation. The Lisbon Treaty has given the European Union a veto powers over free trade which could hand it US Congress style powers,” said Pieter Cleppe, head of Open Europe’s  Brussels office.

“There could be a risk of response from the EU if the imbalanced trade links continue, such as banning EU companies from asking China to fund outsourcing.”

Undoubtedly, there has been a shift in the political balance towards China that is highlighted by the EU ending development assistance to China, while they hand out soft loans to companies across Europe. An emerging tide has arrived from the east.

China does not appear to be looking at Europe as a supranational collective and has positioned itself in a way that views Europe on a country by country basis, that over the medium term could even create a pro-Chinese bloc of countries while richer countries such as Germany look on with increasing suspicion.

Although China is not a superpower just yet, and is not in a position to colonise Europe using its superior financial power as some may fear, but it may be looking at Europe in a different way to how Europe views itself.