By LINGLING WEI
BEIJINGâ"China will continue to invest in European government debt, though on the condition of a full evaluation of risk, Chinese Premier Wen Jiabao said Thursday.
At a press conference held jointly with German Chancellor Angela Merkel, who is here on her second trip to China this year, Mr. Wen said China will also strengthen talks with the European Central Bank and others in an effort to help the debt-laden continent ride out its crisis. Mr. Wen said the euro-zone debt crisis was a major focus of his talks with Ms. Merkel on Thursday.
The key to solving the crisis is to "strike a balance" between fiscal tightening and economic stimulus, Mr. Wen said, acknowledging that solving the crisis will take a long time. China maintains its confidence in the euro and will continue to buy European government bonds to help debt-ridden European countries to ride out the crisis, Mr. Wen said.
Ms. Merkel said "big progress" has been made toward arresting the crisis, but it is not over yet.
European countries have the "political will" to revive market confidence in euro, she said.
European officials have expressed hope that China could deploy significant amounts of its huge foreign-currency reserves to invest in EU bailout funds. China has been a regular buyer of bonds issued by the European Financial Stability Facility and also the sovereign debt of various euro-zone nations, but the level of its investment remains unknown.
Mr. Wen's remarks echo some recent comments made by Chinese officials. At an EU-China meeting in Beijing in July, Dai Bingguo, the Chinese co-chairman of the talks, pledged that "China is sincere and firm in supporting European efforts to deal with the sovereign debt problem."
Ms. Merkel and Mr. Wen pledged to strengthen their own economic ties, amid signs both are being affected by the euro-zone crisis.
On Thursday, China and Airbus unveiled a procurement deal with the leasing arm of Industrial & Commercial Bank of China Ltd. involving 50 Airbus A320 jetliners valued at $3.5 billion, according to the state-run Xinhua news agency, one of a number of deals announced during Ms. Merkel's visit. Xinhua didn't disclose financial terms. Chinese Premier Wen Jiabao and Ms. Merkel attended the signing ceremony, Xinhua said. Airbus is a unit of Franco-German European Aeronautic Defence & Space Co.
Airbus also signed an agreement to build an assembly line in the Chinese city of Tianjin under an agreement it valued at $1.6 billion, according to German officials, and Germany's Volkswagen AG signed an agreement to invest about $290 million in Tianjin. Under the agreement, Volkswagen will build a plant in Tianjin to make auto parts. The pact marks Volkswagen's continued bet on the growth in China's auto market, said an official with the Administrative Commission of Tianjin Economic-Technological Development Area.
Meanwhile, officials said Chinese telecommunications equipment maker ZTE Corp. and Germany's IET Holding GmbH signed a $1.3 billion pact for a telecommunications project.
Ms. Merkel is seeking to improve relations between Europe's largest economy and the world's second-largest economy. She is accompanied by an entourage of seven cabinet ministers and nearly two dozen leading German industry executives.
Trade between China and Germany has grown steadily over the past decade, reaching about â¬144 billion (about $180.6 billion) in 2011, an increase of 10% from the year before, according to the German government.
German companies invested â¬26 billion in China last year, dwarfing China's investment in Germany of about â¬1.2 billion.
About 5,000 German companies have set up shop in China, employing 220,000 people, according to statistics from the German Chamber of Commerce in China.
Write to Lingling Wei at lingling.wei@wsj.com
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