SHANGHAI, Sept 26: European Union Trade Commissioner Peter Mandelson on Friday encouraged China to use its economic power to help calm the storm in the financial world.

China has used its 200-billion-dollar sovereign wealth fund to invest in international markets in an objective and responsible way and should continue to do so, he said.

“Openness, trust and cooperation will help us through the current storm in the financial sector,” Mandelson told a press conference while in Beijing for meetings with Chinese officials.

China set up the China Investment Corp (CIC) sovereign wealth fund to invest part of the country’s 1.8 trillion dollars in foreign reserves overseas to guard against devaluation and extend its financial influence.

Morgan Stanley has reportedly approached both CIC and the Beijing-controlled conglomerate CITIC about buying a stake in the troubled US investment bank.

But analysts believe China may be wary of the risks of investing further in Wall Street.

“The world financial system is so interdependent ... we all have a stake in its success and none of us can afford for it to fail,” Mandelson said.

“I understand there are voices saying let’s disengage. Those voices are wrong. I hope China doesn’t listen,” he said. “China is now a key player and needs to keep playing its hand.” Mandelson said he was due to meet Lou Jiwei, the head of the CIC, later on Friday and he would express his confidence in the fund’s work.

Since it was set up a year ago, notable investments by the CIC include in Morgan Stanley, the US private equity group Blackstone and British oil company BP.

NANCY PELOSI: US House Speaker Nancy Pelosi said on Friday a plan to rescue US financial institutions “has to happen,” but final agreement is up to conservative Republicans who revolted against the plan being negotiated between Congress and the Treasury Department.

“It will happen because it has to happen,” Pelosi, a California Democrat, said in an interview with ABC.”

“I would hope that we could come to agreement in the next 24 hours.”

But she added that a deal would be up to House Republicans who balked at the $700 billion package being negotiated by congressional leaders and Treasury Secretary Henry Paulson and who have given no sign that they will support it.

Pelosi and her fellow Democrats have said that President George W. Bush has to deliver a large number of Republican votes for the politically unpopular bailout to pass Congress. Lawmakers are expected to continue negotiations on Friday.—Agencies