Beijing has faith in EU to tackle debt crisis

Wen says measures to deal with debt bolster confidence internationally

China on Monday reiterated its confidence in the European Union's efforts to resolve the debt crisis and pledged more cooperation with countries in the bloc.

Premier Wen Jiabao said the EU's major measures to deal with the debt problems and Italy's financial reform and economic revitalization plan have bolstered the confidence of Europe and the international community.

China supports the EU to make more effective efforts and proposed talks for large-scale bilateral cooperation in sectors including trade and technology, Wen said during his meeting with Italian Prime Minister Mario Monti on the sidelines of the ninth annual Asia-Europe Meeting.

Premier Wen Jiabao arrives for the opening ceremony for the ASEM Summit in Vientiane, Laos, on Nov 5. [Photo/Agencies]

He added that China wants to enhance cooperation with Italy to continue tackling the international financial crisis and strengthen Sino-Italian and Sino-EU relations.

Monti said Italy highly appreciates and remains very grateful for China's sustained confidence in the EU economy and the euro currency.

Italy appreciates China's support and help to the EU and Rome in overcoming the debt crisis, Monti said.

Italy is undertaking structural reform, with economic and financial conditions significantly improved, Monti said.

He added that Italy would like to strengthen its cooperation with China in the trade and financial sectors and be a sincere friend with China to achieve mutual benefits.

Later on the day, Wen also met French President Francois Hollande, whose main aim at the summit was to bring the message that "Europe is still an economic power", according to AFP.

"I'm here to reassure Asian countries" but at the same time "to tell them that they also have a role to play in European and global growth", Hollande told reporters aboard his flight to the meeting, AFP reported.

Analysts said China has firmly supported the EU and provided help within its capacity, but structural economic reform is needed to resolve the eurozone crisis.

China has offered $43 billion to the IMF's crisis-fighting reserves, and has helped the EU by buying bonds and increasing imports from its member economies.

However, China should watch out for the possible risks as the debt burden may be ultimately transferred, said Yu Yongding, a researcher with the Institute of World Economics and Politics of the Chinese Academy of Social Sciences.

The European Central Bank announced in September it will increase purchases of government bonds to bring down interest rates for heavily indebted countries in the eurozone.

"Such policies cannot resolve the EU's fundamental problems and may make developing countries, including China, sacrifice their interests," Yu told a forum held in Beijing on Nov 2.

Justin Yifu Lin, former chief economist and senior vice-president of the World Bank, said at the same forum that it may be difficult to push forward structural economic reforms in Southern European countries.

Over the next decade, the global economy will grow very slowly with lurking risks, low rate of return and a high unemployment rate, Lin predicted.

The Italian economy is predicted to shrink by 2.3 percent this year and by 0.5 percent in 2013, according to statistics released by office Istat on Monday.

Contact the writers at lixiaokun@chinadaily.com.cn and chengguangjin@chinadaily.com.cn