Berlin  - Germany and China moved to strengthen their economic ties Thursday amid a severe slowdown in the global economy that has already dramatically undercut economic growth in the world's two leading export nations.

Following talks in Berlin with German Chancellor Angela Merkel, Chinese Prime Minister Wen Jiabao said Europe's biggest economy and China, Asia's emerging economic powerhouse, should "intensify their co-operation to beat the (financial) crisis."

Wen's trip to Europe, which also includes visits to London and Madrid, also serves to highlight the shift in the global balance of power away from the big industrial states.

Speaking following her meeting with Wen, Merkel stressed that the Group of Eight (G8) major industrial nations and Russia was an inadequate forum for facing up to the current economic problems unleashed by the financial crisis.

"It shows that most of the questions cannot be resolved by the G8 nations alone," Merkel said.

The Chinese leader's trip to Europe, which also included the influential Davos Business Forum in Switzerland, comes ahead of the April meeting of Group of 20 (G20) leaders.

The G20 gathering in London is likely to confirm the bigger role being played on the world political and economic stage by leading emerging powers such as Beijing.

Reflecting German business' concerns, Merkel warned at a special China-German economics forum Thursday about the threat of greater protectionism caused by the contraction in the world economy. "Our chance lies with open markets," Merkel told the forum.

"China and Germany face new enormous challenges," Juergen Hambrecht, the chief of German industry's influential Asian-Pacific Committee told the forum.

"It is essential to contain the massive fallout from economic crisis," said Hambrecht, who also heads up the world's biggest chemical company, BASF AG.

"Companies, employers and consumers in the European Union and China profit from open markets," he said. China might have replaced Germany as the world's third biggest economies, based on Beijing data.

However, slumping global economic growth means that Germany has managed to see off a challenge from China to its title as the world's top export nation.

But then, a slowing Chinese economy also whittles away at what has been one of Germany's major export market.

Recent rapid-fire economic growth rates turned in by leading emerging economies such as China and India have become key drivers of Germany's more than
1.4-trillion-dollar export machine.

German exports to China surged by 14.3 per cent in the 11 months to November last year to a total of 31.3 billion euros (40 billion dollars) compared to the same period in
2007, the German statistics office said.

Equally significantly, sharply rising exports to emerging economies such as China also helped to shield Germany during the early days of the global economic storm. Germany turned in a solid economic performance during the first three months of last year.

Moreover, the statistics office also highlighted the role played by German industry in underpinning China's dramatic economic and industrial transformation in recent years with machinery, cars and power generators dominating the German foreign orders to China.

Marking Wen's Berlin visit, China and Germany signed a string of commercial contracts including for construction machinery, truck building and a deal with German industrial giant ThyssenKrupp AG to license key technologies for the German-designed Transrapid magnetic- levitation rail system.

But the economic relations between China and Germany have not been all one way with Chinese companies having moved in recent years to expand into Europe's biggest economy largely through building up a presence in the German research and development sector as well as the IT industries, renewable energies and medical technologies.

However, since late last year, the global financial crisis triggered by a meltdown in the US banking business has strengthened its grip on world economy resulting in bleak warnings about the economic outlook for the coming 12 months.

As a result, China's blistering economic growth rate will slow this year to 6.7 per cent from 9 per cent in 2008, the International Monetary Fund (IMF) forecast this week. Meanwhile, the German economy will shrink by 2.5 per cent this year, the IMF said. dpa