Europe remains a key investment destination for China's foreign exchange reserves, Chinese Premier Wen Jiabao told German Chancellor Angela Merkel in Beijing Friday.

"It's well known China has abundant foreign exchange reserves," said Wen at a press briefing after two-hour talks with Merkel. "As a responsible, long-term investor, China sticks to the principle of having a diversified portfolio. The European market has been, and will stay, one of the key markets for Chinese investment."

Wen said China offered a helping hand when some European countries were hit by a sovereign debt crisis, revealing the friendly relations between China and Europe.

China's helping of those countries was mutually beneficial, Wen added.

"We will continue to pay attention to Europe's financial and economic development, and we hope it will recovery at an early date," he said.

China's foreign exchange reserves stood at 2.3992 trillion U.S. dollars at the end of 2009.

"China has shown its faith in the euro," said Merkel. "We are committed to strengthening the currency."

Merkel described the efforts taken by the EU and euro zone to combat the crisis as "an important signal."

In terms of bilateral trade, Wen said both China and Germany are major producers, manufacturers and exporters.

He added the development of the real economy has contributed to the economic recovery of China and Germany and the world economy as a whole.

Merkel said the two countries are proud of their strong real economies, urging the elimination of trade barriers and the creation of a level-playing field.

She also applauded China's flexible measures on the RMB exchange rate.

Both leaders agreed to fight against trade protectionism.

"Neither China nor Germany is pursuing trade surpluses. We hope to see balanced and sustainable bilateral trade," said Wen.