Europe's debt crisis will top the agenda when the president of the European Commission Jose Manuel Barroso and European Union President Herman van Rompuy meet Chinese Premier Wen Jiabao in the northern Chinese port city of Tianjin.

"We believe the difficulties are temporary and that the European countries... have the ability and fiscal resources to tackle the issue," foreign ministry spokeswoman Jiang Yu told journalists at a regular briefing.

"We hope... to send a positive signal of China and the EU joining hands to meet challenges. This is not only in the common interest of both sides but also conducive to world economic recovery."

Barroso and Van Rompuy, together with EU foreign policy chief Catherine Ashton, will meet China's President Hu Jintao and his likely successor, Vice-President Xi Jinping, in Beijing during the summit.

The two sides are expected to focus on an investment agreement during the annual talks, in stark contrast to last year's summit, which was dominated by EU pressure on China over human rights and the value of its currency.

Informal lending has flourished in China as credit restrictions in the state-controlled banking system forced many small firms to seek financing from rich individuals and companies charging interest rates of up to 70 percent.

Such practices have impaired the government's efforts to contain inflation and raised concerns about China's financial stability after a wave of defaults hit the country's booming coastal region.

In recent months, more than 90 business owners have fled and two committed suicide in the city of Wenzhou over unpaid debts.

Analysts estimate the private lending market could be worth as much as four trillion yuan ($626.4 billion) or about eight percent of formal bank loans.

"The China Banking Regulatory Commission (CBRC) has paid high attention to these issues and (its measures) have achieved clear effects," Liu Mingkang, chairman of the CBRC, said in a speech Wednesday.

The risks are "generally controllable" after the regulator took a series of steps including a ban on bank funds being used in the private lending market and a crackdown on illegally high interest rates, he said.

Liu also sought to ease worries over the huge volume of loans to the real estate sector, saying that the latest official stress tests showed banks could withstand a 40 percent decline in property prices.

Chinese banks granted a total of 10.4 trillion yuan to the property market by the end of August, or 19.8 percent of all outstanding loans, he said.