Global crisis increases uncertainty for China

BEIJING (Reuters) - China is doing all it can to counter the international financial crisis, a "severe shock" which has increased its own uncertainties, its leaders said, but may be asked to cooperate further on an international response.

"The global financial crisis has clearly increased the uncertainties and unstable factors in the Chinese economy's development," President Hu Jintao told the opening ceremony of an Asia-Europe meeting on Friday.

"China's economic growth faces various hardships and challenges... For China's economy to maintain a healthy state is itself an important contribution to global financial stability and economic development."

China was doing everything it could to counter the crisis, by implementing flexible and prudent policies to keep growth on track, Hu said.

Beijing is hosting a summit of 27 European Union member states and 16 Asian countries to discuss the global downturn, climate change and international security.

European leaders would call on Asian support, when submitting a unified response to a financial summit due to be held in Washington next month, French President Nicolas Sarkozy said.

"Europe would like Asia to support our efforts, and we would like to make sure that on November 15 we can face the world together and say that the causes of this unprecedented crisis will never be allowed to happen again," he told the summit.

"If we manage to make sure that this is done, maybe this crisis will go down in history as the day on which we managed to enter the 21st century and start resolving this crisis."

COOPERATION

Cooperation and dialogue between Asia and Europe was even more important in such uncertain times, Hu said, adding that instability in global energy and grain markets was also a challenge.

"We should embrace an open attitude and make full use of our strong economic complementarities to deepen existing cooperation."

The leaders' meeting came at the end of another volatile week in world markets, with China's benchmark stock exchange ending at its lowest level in two years and commodities markets battered by heavy selling.

"The global financial crisis has been constantly spreading and worsening, creating a severe shock to global economic growth," Premier Wen Jiabao said.

Despite the talk of unity, the European leaders visiting Beijing also pointed to areas where developed and developing countries have so far not seen eye to eye.

The President of the European Commission, Jose Manuel Barroso, pointedly reminded his fellow leaders that countries need to promote an "ambitious and comprehensive" outcome to talks on combating climate change.

China is widely thought to have overtaken the United States as the world's largest producer of greenhouse gases, but it argues that its industries need leeway to catch up to developed economies.

"Europe is not telling Asia that you need to make an effort. We are simply saying that we are going to play by much more stringent rules ourselves than the ones that we are asking you to implement," Sarkozy said.

Sarkozy called human dignity a fundamental right, and Barroso noted the universality of human rights, without going into details. On the eve of their arrival, the European parliament awarded the Sakharov prize to jailed Chinese dissident Hu Jia, to the annoyance of China's foreign ministry.

(Writing by Lucy Hornby; Editing by Nick Macfie)