Europe crisis tops agenda as China, EU leaders meet

(BEIJING) - Chinese and EU leaders will meet Tuesday for a major summit set to be dominated by Europe's debt crisis, as an increasingly worried Beijing considers coming to the rescue of the embattled continent.

The summit comes a day after ratings agency Moody's downgraded Italy, Spain and Portugal and warned that France, Britain and Austria were increasingly vulnerable to the crisis, which China said had reached a "critical" stage.

Beijing has made clear its growing concerns over the crisis in Europe, its biggest export market, repeatedly urging EU leaders to get a grip on the situation.

On Tuesday, Premier Wen Jiabao will hold talks with EU president Herman Van Rompuy and European Commission president Jose Manuel Barroso likely to touch on Syria, Iran and a controversial EU carbon charge on airlines.

But concerns over Europe's economy and financial sector are expected to dominate.

European leaders have already asked China, which holds the world's largest foreign exchange reserves, to invest in a bailout fund to rescue debt-stricken states.

Beijing has so far made no firm commitment, but Wen said this month it was considering offering help through the International Monetary Fund or bailout funds, and there is speculation China will make its position clearer at the summit.

"Helping stability in the European market is actually helping ourselves... We have to keep import and export policies stable," the Chinese premier said after talks with the visiting German Chancellor Angela Merkel.

The IMF warned last week that an escalation of the crisis could slash China's economic growth in half this year, and foreign ministry spokesman Liu Weimin said Monday the debt issue was "at a critical juncture".

"We believe that as China's largest trading partner and the largest economy in the world (collectively), it is important for the European Union to resolve this issue," he added.

Van Rompuy sought to reassure his Chinese counterparts about the situation in Europe in an interview published Monday in the state-run China Daily newspaper.

"The debt crisis in the eurozone is being solved by its members," he was quoted as saying.

His remarks came as debt-stricken Greece took a key first step towards averting bankruptcy and securing a second bailout after lawmakers approved radical budget cuts despite street battles in the capital Athens.

The talks between EU and Chinese officials are also likely to touch on a new European law that imposes charges on airline carbon emissions, which China has banned its carriers from paying.

The issue of market access may also be on the agenda, as foreign firms complain China favours domestic companies and squeezes them out of some markets, including lucrative government procurement contracts.

EU trade commissioner Karel De Gucht, who said last month he is drafting a law in response to Chinese protectionism in public markets, will be present at the summit.

De Gucht has been a fierce critic of China's restrictions on rare earths exports, 17 elements crucial in the manufacturing of many high-tech products such iPods and flat-screen televisions.

The crisis in Syria is also likely to come up after China and Russia vetoed a UN Security Council resolution condemning the regime's bloody crackdown on protests, as are concerns over Iran's nuclear ambitions.

Wen, Barroso and Van Rompuy will hold a joint news conference after the summit, which was originally due to take place in October but had to be postponed due to the debt crisis.