Photo: (AP Photo/Ng Han Guan)
(Adds trade figures in seventh paragraph, comment from Merkel in ninth paragraph.)Aug. 30 (Bloomberg) — Chinese Premier Wen Jiabao told visiting German Chancellor Angela Merkel that Spain, Italy and Greece must take “comprehensive measures” to prevent a worsening of the euro region’s sovereign-debt crisis.
“The main worries are two-fold: First is whether Greece will leave the euro zone,” Wen said today in Beijing, according to a pool report. “The second is whether Italy and Spain will take comprehensive rescue measures. Resolving these two problems rests with whether Greece, Spain, Italy and other countries have the determination for reform.”
Europe’s slump is deepening as governments struggle to restore investor confidence and companies eliminate jobs. Economies are stalling or contracting amid concern about a possible Greek exit from the euro and the ability of Spain and Italy to service their debts.
Wen said he was more confident about the euro area after meeting today with Merkel. Their meeting coincided with the signing of a $3.5 billion agreement for the leasing arm of Beijing-based Industrial & Commercial Bank of China Ltd. to buy 50 Airbus SAS A320 aircraft, one of more than 10 accords signed today, the official Xinhua News Agency reported.
“After I heard her views, it increased my confidence,” Wen said at the Great Hall of the People. “But I must honestly say, the implementation of these measures won’t be completely smooth.” Wen said he was “worried” about the European debt crisis.
China is willing to keep investing in euro-area debt “on condition of fully evaluating the risks,” Wen said to reporters.
The European Union is China’s second-biggest export market after the U.S., and shipments are plunging, exacerbating the slowdown in China’s own economic growth. China’s exports to the EU fell 16.2 per cent in July from a year earlier, with sales to Italy falling 35.8 per cent, according to Chinese customs figures.
In addition to winning contracts for German companies, Merkel is trying to convince Wen and other Chinese leaders that the euro region is a good place to invest. Gross domestic product in the 17-nation currency bloc fell 0.2 per cent from the first quarter, the EU’s statistics office said Aug. 14.
Merkel said “it’s very, very important that we regain confidence in all the countries” of the euro region and thanked China for maintaining confidence in the joint currency. Merkel said she told Wen that euro-area nations are overhauling their economies “and that there is an absolute political will in the euro zone to make the euro a stable currency again.”
–Michael Forsythe, with assistance from Penny Peng in Beijing and Tony Czuczka in Berlin. Editors: Scott Lanman, Peter Hirschberg
To contact Bloomberg News staff for this story: Michael Forsythe in Beijing at [email protected]
To contact the editor responsible for this story: Peter Hirschberg at [email protected]