Chinese leaders warn of euro debt crisis

Top Chinese leaders have warned of the dangers of a deteriorating European debt crisis, vowing to participate in reforms of the International Monetary Fund (IMF) during a two-day visit to China by the mechanism's chief, Christine Lagarde.

Chinese Premier Wen Jiabao (R) meets with Christine Lagarde, managing director of the International Monetary Fund (IMF), in Beijing, capital of China, Nov. 10, 2011. [Li Xueren/Xinhua]

Warning about European debt crisis

"The European sovereign debt crisis has raised the fiscal and financial risks in developed economies, throwing in severe challenges to world economic recovery," Premier Wen Jiabao told Lagarde during a Thursday meeting.

Lagarde, who was appointed Managing Director of the IMF in June with China's support, is on her first trip to Beijing after she took office.

During the visit, Lagarde discussed the world economy and the European debt crisis with Premier Wen, Vice President Xi Jinping, Vice Premier Wang Qishan and central bank governor Zhou Xiaochuan.

"China supports the counter measures taken by the European Union, the European Central Bank and the IMF in coping with the sovereign debt crisis," Wen said.

The debt crisis, which broke out in Greece in 2009, is hindering the world economic recovery, with particular recent worries in Italy, the Eurozone's third-largest economy, and in Portugal and Ireland.

"We hope to work closely with various parties... to preserve international financial stability and beef up confidence and driving force for the world economy," Wen said.

The growth of two-way trade between the European Union (EU) and China, now the EU's largest trading partner is slowing due to the crisis.

During a Wednesday speech in Beijing, Lagarde said the global economy has entered a "dangerous and uncertain phase," and there is a possibility for "a lost decade of low growth and high unemployment."

She urged advanced economies to undertake polices to restore confidence and lift growth while praising China's policy-making and economic performance.

China's steady and fast economic growth is of "irreplaceable significance" to world stability and development, she told Wen during the 50-minute meeting.

"The Chinese government will run its own affairs well. And the country is committed to ensuring steady and fast economic growth," Wen said.

Zhang Hanlin, a professor on the study of the World Trade Organization, said China's policies of stimulating imports amid the global financial and economic crisis have contributed much to the world economy.

Customs statistics show China's monthly imports in October increased by 28.7 percent year on year to hit 140 billion U.S. dollars. The favorable trade balance has narrowed by 15 percent in the January-October period.

"Significantly, such an imports growth was fueled by China's booming domestic consumption, which will benefit the world economy recovery," Zhang said.

Pledging participation in IMF reform

Chinese leaders also stressed the importance of reform of the IMF to the world economy, an issue highlighted in President Hu Jintao's speech on the Group of 20 Leaders' Summit in Cannes last week.

"China will help the IMF to play a more positive role in financial crisis aid, supervision and coordination of countries' macroeconomic policies and maintaining global economic stability," Wen said.

As an emerging economy and developing country, China has repeatedly advocated for increasing the voice of countries of its kind in world economic governance. "The reform of the Special Drawing Right and the appointment of Zhu Min as deputy managing director of IMF are progress made in this direction," Vice President Xi said.

Xi appreciated Lagarde's efforts in boosting IMF reform, pledging joint efforts with the 187-member organization to promote reform, improve the governance of the global economy and promote economic recovery.