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China's Wen calls on Europe's leaders to get house in order

BEIJING -- Expressing alarm at Europe's debt problems, Chinese Premier Wen Jiabao called on Greece, Spain and Italy to embrace budget cuts and get their finances in order after meeting Thursday with visiting German Chancellor Angela Merkel.

Wen said Beijing is willing to keep buying European bonds but gave no sign Beijing will bail out the eurozone.

Merkel was in Beijing for talks aimed at boosting trade and allaying Chinese fears about Europe's heavy government debts. China has a stake in a resolution because Europe is its biggest export market and Beijing holds billions of dollars in European bonds.

“The European debt crisis has continued to worsen, giving rise to serious concerns in the international community. Frankly speaking, I am also worried,” Wen told reporters. He cited uncertainty over whether Greece leaves the eurozone and whether Italy and Spain will take “comprehensive rescue measures,” a reference to spending cuts and tax increases to balance their budgets.

“Resolving these two problems rests with whether Greece, Spain, Italy and other countries have the determination for reform,” the premier said. “Resolving the European debt problem requires fiscal tightening and finding balance within individual economies.”

Wen's comments were unusually pointed for China. Wen said Beijing was willing to buy European bonds so long as it could evaluate the risks and to help the EU, IMF and ECB — the so-called troika — support indebted eurozone countries “in overcoming hardships.”

Merkel told reporters that while the crisis is not over, countries such as Italy and Greece were “on an intensive road of reforms. I am convinced that this will bear fruit.”

Greek politicians agreed this week on an austerity package but were negotiating details.

“I want Greece to remain part of the eurozone,” Merkel said.

Later, Wen and Merkel presided at a signing ceremony for billions of dollars in business deals — a regular event during visits by European leaders.

Airbus Industrie, a unit of the French-German consortium EADS, committed to invest US$1.6 billion in the second phase of an aircraft final assembly plant opened in 2008 in Tianjin, Wen's hometown. A Chinese state company signed an agreement to purchase 50 Airbus jetliners valued at $3.5 billion.

Volkswagen AG, Europe's biggest automaker, signed a deal to invest $219 million in an “environmentally friendly production facility” and vocational training initiative, also in Tianjin. Eurocopter, another EADS unit, signed an agreement to build a $12.5 million production facility in China.

Officials of the two governments also signed agreements to collaborate in biotechnology, electric vehicles, agriculture, education, labor and the environment.

The next round of Chinese-German meetings was scheduled for next year, but German officials say Wen asked Merkel to come early before the Communist Party begins a handover of power October. Merkel met later Thursday with Xi Jinping, who is due to become president.

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