President Hu Jintao and his French counterpart, Nicolas Sarkozy, discussed global economic prospects on the phone Thursday, as Beijing welcomed a eurozone bailout deal aimed at reducing the debt burden facing Greece.
Sarkozy briefed Hu on the EU summit in Brussels and the bloc's latest measures to solve the eurozone debt crisis, saying that the EU will actively address the issue, according to the Xinhua News Agency.
Hu replied that measures adopted during the last summit demonstrated European countries' willingness to jointly overcome the crisis, and hoped the new measures would help the region to recover.
The two leaders also exchanged views on the current international economic situation and the upcoming G20 summit in Cannes.
Their talks came just hours after EU leaders arrived at a hard-fought deal in Brussels that will have private banks accept a 50 percent loss on their Greek government bonds in order to ease the country's debt burden to 120 percent of its GDP by 2020, from the current 160 percent.
As part of the deal, European leaders also agreed to expand the bailout fund European Financial Stability Facility (EFSF) to $1.4 trillion.
"We support the EU in taking active measures to tackle their sovereign debt issues," China's Foreign Ministry spokeswoman Jiang Yu said Thursday.
"We are willing to actively explore means to strengthen bilateral cooperation and enhance cooperation in trade, investment, technology and finance," she said.
Before the talks with Hu, Sarkozy said Thursday he would hold discussions with his Chinese counterpart on China helping Europe's efforts to resolve the debt crisis.
Some Western media said China's participation in the bailout effort could be very important.
"Klaus Regling, the man who runs the EFSF, was already scheduled to fly to China tomorrow, but his trip will now be all the more important because Europe's leaders are hoping Beijing will be part of the answer to their prayers," Heather Stewart, the Observer's economics editor, wrote Thursday.
"As part of the rescue package agreed last night, they are planning to set up a Special Purpose Vehicle (SPV)， to hold some of the debts of bailed-out countries such as Greece and Portugal, and they are hoping cash-rich China - and perhaps other countries such as India and Brazil - would like to invest," Stewart said.
Zhu Yiping, an economist at the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce, told the Global Times that China may increase its holding of Europe's sovereign debts even though the euro is depreciating.
"China already has an estimated 600 billion euro ($842.28 billion) exposure to eurozone debts, or a quarter of its $3.2 trillion in foreign exchange reserves," Zhu said.
China's policy-makers have been looking at ways to diversify the country's large dollar reserves.
Zhou Xiaochuan, president of the People's Bank of China, said in August that China must strengthen its financial crisis management against "the negative impact from the international financial market."
"A large foreign exchange reserve helps China's economic reform and its position in the global market. However, as it grows too big and too fast, it also poses challenges for foreign exchange management and the country's macro-economic policy making," Xinhua commented.
Even if China contributes to the bailout, Beijing needs to limit its risk, Huang Wei, an economist at the Chinese Academy of Social Sciences, told The Wall Street Journal.
"I don't think the Chinese government will invest directly in sovereign debt, such as Greek debt, because that's very dangerous," Huang said.
Getting directly involved would put Chinese leaders in a position that is fraught with political risk - spending public funds to bail out European countries that, despite their debt crisis, are still far richer than China per person, the Journal commented.
Hu Ronghua, a vice director of the European Studies Center at Fudan University, told the Global Times that during Regling's visit, which starts today, the EFSF chief will try to find out how far China will be ready to go down the road of eurozone aid.
"Europe has worked through great difficulties via negotiated consensus in the 1970 - 80s and then in the early years of the 2000s. This is not one of their worst times," Hu said.
Separately, the second session of the second China-Europe High-Level Political Parties Forum is scheduled to be held from November 7 to 9 in Brussels.
Attendees of the second session will discuss new ideas and plans regarding bilateral cooperation in economics, trade, social construction and global management, Wang Hua, director of the Western European Affairs Bureau of the International Department of the CPC Central Committee, told Xinhua.
China has provided sincere support and help to the EU and relevant countries, Wang said, asking Europe to guarantee China's investment security.
