China’s potential involvement in the eurozone crisis has triggered a wave of speculation about the political, economic, and strategic implications of China “buying up” or “bailing out” Europe. This comes on top of previous rounds of debate about leverage that Chinese foreign direct investment (FDI), the lure of the Chinese market, and the burgeoning EU-China trade relationship may provide over the EU for Beijing. This speculation has been fanned by leading figures in Europe and China. Chinese Premier Wen Jiabao made a statement in September that seemingly linked support for the eurozone to the EU granting China “market economy status” (MES). Klaus Regling, chairman of the European Financial Stability Facility (EFSF), paid a visit to Beijing in October, soliciting Chinese contributions at a sensitive juncture in the evolution of the crisis. Prime ministers from Greece to Hungary have been touting Chinese bond purchases as votes of confidence in their countries’ finances for well over a year.

Yet the reality has so far been less dramatic. China did not swing in behind the EFSF. From the limited amount of information available, its bond purchases appear to be skewed heavily towards the “safe” core bond issuers in Europe rather than support to the more distressed periphery. Chinese FDI in Europe remains very modest, at barely 0.2 percent of the total inflow.1 More recently, Chinese officials have moved from cultivating ambiguity about their potential involvement in eurozone rescue packages towards actively dampening expectations. On the EU’s part, there has been no sign of major concessions being offered to China in the hope that this will smooth the way for Chinese cash.

So why so much noise? Why so little action? And has anything of consequence really taken place at all?