BEIJING - CHINESE President Hu Jintao expressed concerns over the ailing US financial system in a phone conversation with US President George W. Bush, state media reported on Wednesday.

China, which holds hundreds of billions of dollars in US government bonds, has enacted a growing number of measures to stimulate growth as its crucial export sector suffers from the downturn in US and European markets.

The Chinese economy expanded by just 9 per cent in the third quarter, its most sluggish pace in five years.

Waves of layoffs in the manufacturing sector, joined by downturns in real estate and the stock market, could threaten the government's all-important goal of social and political stability.

In their conversation on Tuesday night Chinese time, Mr Hu told Mr Bush he hopes US stabilisation measures would 'take effect as soon as possible, restore investor confidence and prevent further expansion of the crisis,' the Xinhua News Agency.

'The measures are conducive to the stability of the world economy and financial markets', it quoted Mr Hu as saying.

The two also discussed upcoming financial summits and other forms of international cooperation to stabilize markets, Xinhua said.

On Wednesday, Chinese Vice President Xi Jinping 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,' said Mr Xi, a former top official in China's ommercial hub of Shanghai and two fast-growing coastal provinces.

On Tuesday, China's Foreign Ministry said the global meltdown would be discussed during a meeting of Asian and European leaders in Beijing later this week.

Spokesman Qin Gang said the Asia Europe Meeting that begins in Beijing on Friday would be the 'perfect platform' for leaders to discuss ways of dealing with the crisis.

French President Nicolas Sarkozy has pledged to use the meeting to persuade Asian nations to sign up to a plan to redraw the rule book for international capitalism.

He has called for a global system of regulation to prevent a repeat of the market meltdown.

China's banks hold relatively little of the toxic mortgage-related debt that is wreaking havoc on US institutions, and have been largely shielded from the global shock waves due to strict credit controls.

The government is still drafting specifics of broad plans to help counter the chill on the world's fastest growing major economy.

Details have been scant, although the policy shift represents a clear abandonment of attempts to curb lending and control spending on infrastructure in favour of an easing of controls on lending to small- and medium-size companies.

The plans reported in China's state media call for boosting export tax rebates for labour intensive products such as clothing and toys, appliances and machinery.

But they gave no specific numbers.

Economists also expect the government to drastically boost spending on construction of basic infrastructure such as roads and public housing, as well as the rebuilding of the region devastated by the May 12 earthquake in central China. -- AP