Wen tells Europe fundamental reforms needed

Chinese Premier Wen Jiabao urged Europe on Friday to stop its debt crisis spreading across the bloc, warning that fundamental reforms were needed to staunch the eurozone's troubles, in comments made after the two sides postponed an annual summit.
In a phone call with European Council President Herman Van Rompuy, Wen repeated past comments that China stood by Europe's efforts to surmount its economic crisis. But as European leaders prepare for a weekend crisis meeting on how to increase a eurozone bailout fund, Wen struck a new tone of exasperated urgency.
"The most urgent task is to take decisive measures to prevent the debt crisis from spreading further and avoid financial market turbulence, a recession and fluctuations in the euro," Wen told Van Rompuy, according to a report on the Chinese Foreign Ministry's website (www.mfa.gov.cn).
Deep divisions between France and Germany threaten to foil the weekend meeting of European leaders. Wen told Van Rompuy that the euro debt crisis "is also the outcome of problems within the European Union and eurozone that have accumulated over a long time." "Apart from urgent measures to address these problems, the key is to undertake systematic and fundamental fiscal and financial reform," said Wen.
"This will demand extraordinary political courage and judgement, and will demand a consensus among all sides." China holds an estimated quarter of its $3.2 trillion of foreign exchange reserves in euro assets. It has few options on where to put that wealth, giving it strong reasons to press Europe to surmount divisions, contain the debt crisis and protect Beijing's stake in its biggest trade partner.
The euro bloc's crisis has already taken a toll on Chinese exports, which grew at their slowest pace in seven months in September. Wen's latest comments were starker than other recent remarks from Beijing, which has repeatedly voiced confidence that Europe can overcome its problems. "The pressing task is to take decisive measures to prevent the debt crisis spreading further, avoiding turbulence in the euro, market contraction and a severe economic recession," he said.
"I've seen that Europe's leaders have an ardent political will, and I hope they can turn their political will into concrete and effective action to safeguard the stability of the euro and European markets to boost market confidence." As recently as Thursday, China's Foreign Ministry stuck to a blandly positive tone, and said Europe's problems would pass and Beijing is willing to expand co-operation.