China can make 'new contribution' to global growth: Wen

DALIAN: China's Premier Wen Jiabao said Wednesday his country's expanding economy could contribute further to global growth, and pledged to expand its investment in Europe.

He also urged action to prevent the spread of the sovereign debt crisis, which has sent stock markets plummeting.

"I am confident that China's economy will make a new contribution to robust, sustainable and balanced growth in the global economy," Wen said, as he opened the summer session of the World Economic Forum in a speech in the Chinese port city of Dalian.

Wen also warned that the global economic recovery would be a "long" and "difficult" process.

"Sovereign debt risks are growing in some countries, causing turbulence on the international financial market," he said.

"Unemployment in major economies remains high, while emerging economies are facing upward inflationary pressure. All this shows that the world economic recovery will be a long-term, difficult and complicated process."

His speech comes as global markets have been rocked this week by renewed fears that Greece, which was recently given the green light for a second bailout, will default on its debt obligations.

Portugal and Ireland have also received rescue packages while analysts have warned that Italy and Spain could follow suit, leading to warnings that the crisis could spread to other major economies.

The Chinese premier said his country, which has the world's second biggest economy, would continue to increase its investment in the eurozone, a day after reports -- denied by Rome -- that Italy had asked Beijing to buy its bonds.

"China will continue to expand investment in Europe, but European Union leaders and the leaders of its (Europe's) main countries must also courageously look at China's relationship from a strategic viewpoint," Wen said.

Wen made the comments as the emerging economies of Brazil, Russia, India, China and South Africa prepared to meet next week to discuss possible aid to the eurozone as it confronts a worsening debt crisis.

China is sitting on more than $3 trillion in foreign currency reserves and has already committed to investing in Greece, Spain and Portugal.

The Chinese premier also warned that his country's growth would slow in the long term as it reached a "new stage of development", and pledged to increase domestic consumer demand.

"China's development is not yet balanced, coordinated and sustainable, there are many institutional constraints hindering scientific development," he said.

"As the size of the Chinese economy grows, it will become difficult to keep high speed growth over a long period of time.

"We have the right conditions and we have both the ability and confidence to maintain steady and fast growth of the economy and bring China's economy to a new stage of development."

China, he said, would "continue to follow the strategy of following expansion of domestic demand and... increasing consumer demand to drive economic growth."

Copyright AFP (Agence France-Presse), 2011