Merkel has urged China to use its influence to make Iran more 'transparent' about its nuclear programme [Reuters]

The Chinese premier has told Angela Merkel, the visiting German chancellor, that his country has confidence in the euro and is considering greater involvement in resolving the eurozone debt crisis.

Wen Jiabao said in Beijing on Thursday that China was considering "more participation" in the European Financial Stability Facility and the European Stability Mechanism, the eurozone's bailout funds. He gave no further details.

"The Chinese side supports efforts to maintain the stability of the euro and the eurozone," he said after talks with Merkel.

He said China had confidence in the euro and the European economy. Merkel had said earlier that the European Union was on track to financial recovery.

Wen said he held "a series of important discussions on the economy and culture" with Merkel, which would push ties between China and Germany in a "new direction".

It was important to protect national interests in the current "complicated political-economic situation", he said.

Commercial co-operation

Merkel said both sides should avoid protectionism and she urged the Chinese government to give "German companies a chance to compete in China".

She called for closer commercial co-operation with China, one of Germany's biggest trading partners.

However, she also pointed to China as a competitor, saying that Europeans will see manufacturing jobs shift there if they fail to boost competitiveness.

Merkel is the first of several European leaders to visit China this month for talks expected largely to focus on the economic crisis.

Europe is China's biggest export market and Beijing's stake in its financial health is growing as Chinese companies expand there.

State media says that China is unlikely to purchase large volumes of European bonds unless the EU demonstrates greater unity on reforming its financial system and spurring growth.

Germany saw China as possessing "more and more" power in the International Monetary Fund and wanted to co-operate with Beijing to move its renminbi currency towards free convertibility, Merkel said.

Divided on Iran

In remarks earlier on Thursday, Merkel urged China to persuade Iran to be more "open and transparent" and help "make Iran understand that the world must not have another power with nuclear weapons."

Appearing with Wen, she said there was no alternative to sanctions on Iran.

The EU decided in January to impose tough new oil sanctions on Iran [Al Jazeera]

Wen said later that China still favoured a negotiated solution to the nuclear dispute with Iran.

"Sanctions will not solve the problem," he said.

China gets more than 10 per cent of its oil imports from Iran.

Chinese analysts have warned of potential economic damage if an embargo is imposed because China could not easily get replacement supplies elsewhere.

Germany hoped the UN Security Council, of which China is one of five veto-holding permanent members, would be able to agree a unanimous resolution on Iran, Merkel said.

She also said the Security Council should speak out against human-rights abuses in Syria.

Merkel was due to meet Hu Jintao, the Chinese president, on Friday.

The chancellor said "more sensitive topics," including human rights and the rule of law, would also be on her agenda, but gave no further details.

Source: Al Jazeera and agencies