The market is rallying on the story that China will buy bonds issued by the EFSF. This is not a surprise as they expressed interest back in January, http://www.irishtimes.com/newspaper/finance/2011/0126/1224288325350.html, and China is not doing this out of the goodness of their heart. EFSF is AAA rated paper (assuming France keeps theirs) and the diversification it provides the Chinese away from US Treasuries is much different than China saying they will buy Italian, Spanish or Portuguese debt directly. Thus, this basically is the more conservative way of investing in Europe. Japan has been buying EFSF since they were first issued.