Market Commentary and Intraday News
China's Wen calls for action on Europe debt
292 days ago
By JOE McDONALD
AP Business Writer
(AP:BEIJING) Chinese Premier Wen Jiabao expressed alarm Thursday about Europe's debt problems and called on Greece, Spain and Italy to embrace budget cuts and other reforms following a meeting with visiting German Chancellor Angela Merkel.
Merkel was in Beijing for talks aimed at boosting trade amid slowing global growth and allaying fears about Europe's heavy government debts. China has a stake in a resolution not only because Europe is its biggest export market, but because Beijing holds billions of dollars in European bonds.
"The European debt crisis has continued to worsen, giving rise to serious concerns in the international community. Frankly speaking, I am also worried," Wen told reporters after the meeting.
"The main worries are two-fold: first is whether Greece will leave the eurozone," he said. "The second is whether Italy and Spain will take comprehensive rescue measures. Resolving these two problems rests with whether Greece, Spain, Italy and other countries have the determination for reform."
The premier added later, "Resolving the European debt problem requires fiscal tightening and finding balance within individual economies."
Wen said Beijing would continue to buy European government bonds so long as "risks are controlled," the official Xinhua News Agency reported.
Ahead of Merkel's visit, German officials told reporters Berlin wanted to reassure Beijing that European debt is a "safe and good investment."
Later, Wen and Merkel presided at a signing ceremony for billions of dollars in business deals _ a regular event during visits by European leaders.
Airbus Industrie committed to invest $1.6 billion in the second phase of an aircraft final assembly plant opened in 2008 in Tianjin, Wen's hometown. A Chinese state company signed an agreement to purchase 50 Airbus jetliners valued at $3.5 billion.
Volkswagen AG, Europe's biggest automaker, signed a deal to invest $219 million in an "environmentally friendly production facility" and vocational training initiative, also in Tianjin.
Officials of the two governments also signed agreements to collaborate in biotechnology, electric vehicles, agriculture, education, labor and the environment.
The next round in a regular series of Chinese-German meetings was scheduled for next year, but German officials say Wen asked Merkel to come early before the Communist Party begins a once-a-decade handover of power to younger leaders in October.
Merkel's two-day visit includes meetings with Xi Jinping, who is due to become party leader and president, and Li Keqiang, in line to become premier.
It comes as Beijing is struggling to pull China out of its deepest economic slump since the 2008 global crisis. The government has cut interest rates twice and is pumping money into the economy with a wave of investments by state companies.
A Cabinet official said Wednesday that official measures are starting to take effect and growth was "stabilizing at a slow pace." But corporate profits are down and a survey of manufacturers released last week showed future export orders have fallen.
Germany is China's biggest European trading partner and one of the few developed economies with which it runs a trade deficit, due to large imports of German factory equipment and industrial components. Beijing reported a $16.3 billion trade deficit with Germany last year and $13 billion for the first seven months of this year.
Merkel was accompanied by a 20-member delegation of executives from German companies in the auto, chemicals, energy, commodities and other industries.
The visit also comes amid tension over a request by European manufacturers of solar power equipment for anti-dumping duties on Chinese products they say are improperly subsidized. Chinese manufacturers that depend on the European market have warned Beijing might retaliate.
The visit focuses mostly on economic issues, but a senior German official told reporters he expects an "open discussion" with Chinese leaders on Syria, which is in the throes of a civil war that has left an estimated 20,000 people dead. Russia and China have repeatedly used their veto power in the U.N. Security Council to block strong Western- and Arab-backed action against President Bashar Assad's regime that could have led to sanctions.
Germany hopes a Security Council agreement on humanitarian issues could help provide a basis for a stronger agreement on political questions, the official said, speaking on condition of anonymity.
On Friday, Merkel and Wen planned to travel to Tianjin, east of Beijing, to visit the Airbus plant.
AP writer Geir Moulson in Berlin and APTN producer Aritz Parra in Beijing contributed.
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