China :Europe debt crisis is now 'critical'

Europe's debt crisis has reached a "critical juncture", Beijing said on Monday, a day ahead of talks between Chinese leaders and European Union officials. The crisis, which has triggered violent unrest in Greece, will top the agenda at the EU-China summit this week as Europe's leaders try to persuade Beijing to help resolve the continent's financial woes. "China is concerned over it. The debt issue is at a critical juncture," foreign ministry spokesman Liu Weimin told a press briefing in response to a question about the crisis. "We believe that as China's largest trading partner and the largest economy in the world (collectively), it is important for the European Union to resolve this issue. "Apart from contingency measures, they should also push forward... structural and long-term reforms." European leaders have previously called on China, which has the world's largest foreign exchange reserves, to invest in a bailout fund to rescue debt-stricken countries. Beijing has so far made no firm commitment to provide financial assistance, but Chinese Premier Wen Jiabao said last month it was considering offering assistance through the International Monetary Fund or bailout funds. Wen will hold talks in Beijing on Tuesday with EU president Herman van Rompuy and European Commission president Jose Manuel Barroso which are expected to focus on the crisis, following a wave of credit-rating downgrades and as Greece teeters on the brink of bankruptcy. Barroso and Van Rumpuy will also meet with China's President Hu Jintao during the two-day summit, which takes place after lawmakers in Greece agreed late Sunday on a set of drastic austerity measures. The agreement on the measures, which triggered street battles between police and protesters that left dozens injured, cheered markets and led the euro to rise in Asian trade. Beijing has watched with increasing concern as the crisis has deepened, repeatedly urging EU leaders to get a grip on the situation and put their house in order. The IMF warned earlier this month that an escalation of Europe's debt crisis could slash China's economic growth in half this year, and urged Beijing to prepare stimulus measures in response. On Monday, the head of China's sovereign wealth fund said German Chancellor Angela Merkel had asked the country's investors to buy Italian and Spanish debt during a recent official visit to China. Lou Jiwei, chairman of the China Investment Corporation, said more reform of those two countries was needed before China would invest in them, in comments reported by the Dow Jones news agency. But he said the fund saw opportunities to invest in infrastructure and industrial projects in Europe. Chinese companies and funds have ramped up their investment in Europe, buying up utilities, energy firms and even luxury yacht makers, in a move welcomed by some but eyed with concern by others. The Chinese government has sought to calm concerns in Europe that a wave of investment by Chinese companies and government-backed funds will give Beijing too much influence over struggling European economies. On Monday, the People's Daily, mouthpiece of China's ruling Communist Party, said in a front-page commentary that the country was not seeking to "buy out Europe".