CHINESE Premier Wen Jiabao said today China was willing to expand its investment in Europe, but European leaders must take certain "bold steps," particularly recognising China's status as a market economy.
Mr Wen, speaking before an audience of global business leaders at a meeting of the World Economic Forum in the northeastern coastal city of Dalian, gave the US and Europe a vote of confidence, saying he believed they would overcome their current economic difficulties.
The focus must now be on preventing the further spread of the European sovereign debt crisis, Mr Wen added. He gave no indication of what specific support or investments China was prepared to undertake for Europe.
Market participants hope China can use some of its massive foreign-exchange reserves to boost investment in European assets, including the sovereign debt of economies such as Italy and Greece, thus helping those countries overcome the current crisis.
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Such hopes led to a global rally in equity prices earlier this week following reports that Italian government officials had met with managers of China's reserves.
China has long demanded that the US and Europe grant it market economy status, a technical designation in international trade law that would provide more favourable treatment in certain trade disputes.
Led by China, the world's second-biggest economy, emerging-market central banks have amassed enormous war chests of international reserves in recent years - partly as a byproduct of efforts to keep their own currencies from rising too fast against the weak US dollar.
China has $US3.2 trillion ($3 trillion) in reserves, and adds an estimated $US1.7 billion every day to its stockpile.
Mr Wen said China was committed to boosting domestic demand and maintaining relatively fast economic growth domestically, thus aiding the global economy.
"I believe China's economy can achieve longer term, better quality growth. This will be our new contribution to strong, sustainable global growth," he said.
The world economy was growing slowly, while uncertainties and risks were on the rise, Mr Wen said.
"Both advanced and developing economies are slowing down, and sovereign debt risks are rising for some countries, causing intense fluctuations in financial markets," he said.
"Unemployment rates are high and not coming down in developed nations, while inflation is rising in developing economies."
Mr Wen called on developed economies to undertake "responsible" fiscal and monetary policies and "handle their own affairs well," but also called for stepped-up global co-ordination of economic policies.
Fluctuations in the value of the US dollar had made commodity prices more volatile around the world, he added.
China, meanwhile, would maintain the stability and continuity of its current economic policies, Mr Wen said.
The country's overall economic situation was good, Mr Wen said.
The slowdown in China's economic growth seen the second quarter was mainly the result of government policies and was within expectations, he said.
China would properly balance controlling inflation, maintaining relatively fast and stable growth, and economic restructuring, he said, repeating standard language.
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