Beijing - German Chancellor Angela Merkel on Friday urged greater transparency and firmer controls over financial markets as part a solution to the global financial turmoil.

Merkel made a four-point proposal to Asian and European leaders discussing the financial crisis in Beijing, according to an advance copy of her speech.

She listed greater transparency in financial markets as the highest priority for supporting a global recovery.

Second on the list of proposals to 45 leaders at the biannual Asia-Europe Meeting (ASEM) was the need for a new structure of incentives.

More control over higher risk equities and a firmer role for the International Monetary Fund as a "guardian of the financial system" were also needed, she said.

In an earlier meeting with Chinese President Hu Jintao, Merkel said stronger international cooperation and the building of a new financial system were essential for overcoming the financial crisis.

Merkel vowed closer cooperation with China in view of the crisis.

"We are ready to work even closer with China, especially in times of economic difficulties," the conservative chancellor said.

Germany's support after the devastating Sichuan earthquake in March helped smooth German-Chinese relations after past upsets, Hu told Merkel.

Germany was the European country "which helped China most after this catastrophe," he said.

"This is a clear sign of friendship from the German government to the Chinese people," he added.

Merkel then met with Chinese intellectuals at a Beijing hotel. According to a participant, discussions included Chinese sensibilities regarding Tibet, as well as Taiwan, the developments within China's society and the effects of the Beijing Olympic Games.

Journalism professor Zhan Jiang, one of the four Chinese participants, told Deutsche Presse-Agentur dpa that the chancellor asked why China had been so annoyed over her meeting the Dalai Lama.

Bilateral relations between China and German deteriorated markedly after a 2007 meeting between Merkel and the Dalai Lama, Tibet's exiled spiritual leader.

"We explained to her that it is very complicated. We have a very difficult relationship with the Dalai Lama," Zhan said.

"The Germans believe this is just a question of religion and culture," constitution expert Cai Dingjian said. "But for China this is related to national sovereignty."

"There is much sunshine in the economic relations with Germany, but we take our sovereignty very seriously and react harshly when Taiwan and Tibet are concerned - then it gets dark in the relations," he added.

Other participants were writer Li Er and historian Wu Si.

Mekel and other ASEM leaders plan to issue a joint statement on the financial crisis at the close of their two-day ASEM summit on Saturday. (dpa)