China welcomes consensus reached at EU debt talks

BEIJING Thu Oct 27, 2011 8:11am EDT

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BEIJING (Reuters) - China welcomed on Thursday the consensus reached at the European Union's summit to tackle the euro zone debt crisis and supported measures taken by the bloc that could help the region's recovery.

Beijing, with its big holdings of European sovereign debt, is one of the main bystanders waiting to see if Europe can provide debt relief for Greece, which risks a default that could trigger a deeper crisis in Italy and other bigger euro zone economies.

After a summit in Brussels, European governments announced an agreement under which private banks and insurers would accept 50 percent losses on their Greek debt holdings in the latest bid to reduce Athens' massive debt load to sustainable levels.

In a telephone conversation with French President Nicolas Sarkozy on Thursday, President Hu Jintao said that he hopes Europe's deal to tackle the sovereign debt crisis will help the region's economic recovery, China's state television reported.

"China hopes all these new measures will help stabilize the European financial market and conquer the current difficulties and promote the economic recovery and development," Hu said.

China hopes the G20 summit in France early next month can send a strong signal on promoting robust and balanced global growth, he said. But he did not give further details.

An EU source had earlier said Sarkozy was expected to speak to Hu about Beijing's possible participation in the bailout fund.

"We hope that this consensus ... is conducive to boosting market confidence," Foreign Ministry spokeswoman Jiang Yu told a regular news briefing. "China is willing to make joint efforts to preserve the global economic recovery and growth."

China is also ready to increase cooperation with the EU in areas of investment, trade and finance, she added, without providing details.

"China supports the measures taken by the EU to deal with the debt crisis problem," Jiang said.

China's official Xinhua news agency said the outcome of the EU summit was "positive but filled with difficulties," adding that the deal showed that Europe could surmount its economic woes.

"It seems that all sides at this summit made big efforts and this will bring confidence to markets and also add impetus to the international community joining hands to respond to the current economic situation," it said.

"This summit shows that the countries of the European Union, especially its main economies, have the resolve to overcome difficulties and create an effective 'rescue umbrella' for the euro," said the Chinese-language agency.

"At the same time, it shows the systemic and structural problems the EU has when it comes to dealing with the crisis that demand improvement."

(Additional reporting by Aileen Wang and Kevin Yao; Editing by Yoko Nishikawa)

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