China is prepared to buy more EU government bonds amid a worsening European debt crisis that is dragging on the world economy, Premier Wen Jiabao said, in the strongest sign of support for its biggest trading partner in months.
The debt crisis, which has dented demand for Chinese exports and dragged China into its worst downturn in three years, was the primary focus of talks between Wen and German Chancellor Angela Merkel who arrived in Beijing on Thursday.
The pair also concluded a flurry of business agreements, including a deal by China to buy 50 Airbus (EAD.PA) worth up to $4 billion, and multi-million-dollar investment deals involving Volkswagen AG (VOWG.DE) and Chinese telecoms equipment maker ZTE 000063.SZ.
Wen said Beijing is willing to continue supporting the debt-stricken euro zone, and will step up talks with the European Union, the European Central Bank and the International Monetary Fund - also known as the troika - to help struggling EU nations.
"China is willing, on condition of fully evaluating the risks, to continue to invest in the euro zone sovereign debt market, and strengthen communication and discussion with the European Union, the European Central Bank the IMF and other key countries to support the indebted euro zone countries in overcoming hardships," he said after meeting Merkel.
Wen, who did not elaborate, said he remained worried about the crisis in the euro zone.
"Recently, 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 a news conference.
"The main worries are two-fold: first is whether Greece will leave the euro zone. 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."
He said a briefing by Merkel assuaged his concerns slightly, but warned that no quick resolution for the crisis is in sight, underscoring Beijing's worries about the debt problems in Europe, China's biggest trading partner.
President Hu Jintao, who met Merkel later in the day, repeated China's support for Europe's efforts to overcome the crisis. "The sooner Europe gets out of its straits, the more helpful it will be for the global recovery and stability and China's economic development," state radio reported.
China's latest promise to buy more European sovereign debt if certain conditions are met encapsulates Beijing's hitherto cool response to Europe's requests for financial aid.
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