China has signalled that the West must do more to recognise it as a market economy if Europe wants further help in fixing its debt crisis.
Beijing's warning comes as Spain, Portugal, Greece and Italy have all turned to the Asian superpower as a potential buyer of their debt.
The still-strong economic growth enjoyed by China, already the biggest foreign creditor to the US, may hand it extra sway in trade negotiations with Europe. The Chinese government wants the European Union to recognise China as a full market economy under World Trade Organisation rules, which would remove many restrictions for Chinese companies.
"It would help the US and the EU break away from their current financial woes should they ditch protectionist measures and sincerely open their arms to Chinese investments, allowing China to make the most of its rich foreign exchange reserves," said state-run news service Xinhua on Tuesday.
China agreed to adopt non-market status for 15 years when joining the WTO in 2001 but Chinese Premier Wen Jiabao said last week that China had reformed enough for his country -- the world's fastest-growing major economy -- to have its WTO status changed now.
Despite the leverage the crisis in Western economies has handed China, a US official warned Beijing on Tuesday it must do more to open up its own economy.
"China's current business climate is causing frustrations among foreign business and government leaders," Gary Locke, the US ambassador to China, said in a speech in the Chinese capital. He also told Beijing to allow its currency to trade more freely and stop intellectual property theft.
China's appetite for US government debt is driven by the need to spend the $3.2 trillion in foreign-exchange reserves it has accumulated through keeping a lid on the value of the yuan.
Analysts think it unlikely Beijing will park yet more money with heavily-indebted European governments without extracting a price.
"China has completed the transformation from a planned economy to a market economy, but the EU still does not recognise China's full market economy status," a spokesman for the Chinese Commerce Ministry said.
The rising tension between China and Europe came amid reports that the Bank of China has stopped trading foreign-exchange forwards and swaps with some European banks.
