China is broke. They need the interest from these loans or they are sunk.
I for one merrily welcome my Chinese overlords!
Overlord #1: http://asianheroes.files.wordpress.com/2008/08/russell-wong.jpg
Overlord #2: http://wallpaper-s.org/72__Jet_Li.htm
Jet Li is currently cheating on me with his wife: http://www.youtube.com/watch?v=bhctcQOL7A4, but I am in a forgiving mood and welcome him back.
I think the Chinese leaked the story about their review on EU bonds to see how the EU reacted. They paniced, so China knows they have the EU by the balls. With this influence China will pursue two things; one, an end to the EU arms embargo and two, tone down criticism on Tibet and Uighurs. Money talks, BS walks or weak nations evoke principles and strong nations evoke artillery.
...the Chinese doing nothing is a wonderful thing. You see, the Chinese government holds about $600 billion in government bonds issued in Europe. That's right -- the bonds of Greece, Portugal, Ireland, Spain -- the so-called "PIGS" nations who have been in the throes of a credit crisis that has rattled the whole world.:')