"The measures are conducive to the stability of the world economy and financial markets," Xinhua quoted Hu as saying, adding that they also discussed forthcoming financial summits and other forms of international co-operation.

China, which holds hundreds of billions of dollars in US government bonds, has pushed through several measures aimed at stimulating growth in the hope of averting a potentially devastating blow to its crucial export sector from the downturn in US and European markets.

Economic expansion

Earlier this week new government data showed the Chinese economy had expanded by just nine per cent in the third quarter, its most sluggish pace in five years.

China's leaders are particularly keen to avoid a surge in job losses which, coupled with downturns in real estate and the stock market, could undermine the government's top priority of ensuring social and political stability.

Hu said urgent action was needed to contain the crisis [GALLO/GETTY]
A series of recent factory closures in the southern manufacturing province of Guangdong have given an ominous indication that the global economic crisis is starting to bite hard.

On Wednesday Hong Kong media reported that at least three more Hong Kong-linked factories had closed in the province, leaving hundreds of workers unemployed.

On Wednesday Xi Jinping, China's vice president, told participants at an Asia-Europe business forum in Beijing that China was following developments abroad closely and "actively evaluating measures that countries have taken to stabilise the financial market.'"

"Countries need to enhance financial dialogues to facilitate international financial reforms and strengthen the ability to face financial risks," he said.

Chinese officials meanwhile are in the process of drafting plans to help alleviate the impact of the financial crisis on the world's fastest growing major economy.

Easing controls

Exact details have been scarce, although it is already clear that the government will abandon attempts to curb lending and control spending on infrastructure in favour of an easing of controls on lending to small- and medium-size companies.

According to reports in state media, the government measures will see a boost in export tax rebates for labour-intensive products such as clothing and toys, appliances and machinery.

The government is also expected to raise spending on the construction of basic infrastructure such as roads and public housing, as well as the rebuilding of the region devastated by the May 12 Sichuan earthquake.