Germany’s Merkel holds talks with China’s Hu

China: German Chancellor Angela Merkel met China’s president on Friday as she seeks to lift Beijing’s confidence in Europe where the sovereign debt crisis threatens to tip the region into recession.

China, the world’s second-biggest economy, has watched with increasing concern as eurozone economies have deteriorated, and has repeatedly urged European leaders to get a grip on the situation.

Merkel’s meeting with President Hu Jintao came a day after talks with Premier Wen Jiabao, who said Beijing was looking at ways it could contribute to Europe’s bailout funds and warned of an “urgent” need to solve the debt crisis. “China is investigating and evaluating ways, through the International Monetary Fund, to be more deeply involved in solving the European debt problem via ESM/EFSF channels,” Wen said at a news conference with Merkel.

Wen was referring to the European Financial Stability Facility, a temporary rescue fund that was established to help struggling economies in Europe, and the European Stability Mechanism -- a newer, permanent fund. Hu told Merkel before their closed-door meeting Friday that her visit would “increase mutual understanding” between the two countries, whose bilateral trade reached $169 billion in 2011, an 18.9 percent increase from the previous year. AFP