Most principles embodied in a new set of financial regulatory rules proposed by the United States and Europe also fit China, and embracing them early would help it strengthen financial stability, the country's deputy central bank governor said on Saturday.

Embracing such principles would help also narrow the regulatory differences between China and western countries, Yi Gang told a financial and banking conference held in Lujiazui, the nerve center of the financial industry in Shanghai.

Separately, Yi also called for negotiations, not trade wars, to resolve disputes, including disputes over the value of China's yuan currency.

China should actively participate in designing global economic management and supervision rules, Yi said.

The new global regulatory framework ... is the result of a huge amount of manpower and human wisdom. Most of the principles and thinking embodied fit China.

Group of 20 leaders meeting this weekend in Toronto want progress on a reform known as Basel III, that requires banks to set aside far more capital and hold a minimum level of liquid assets from the end of 2012.

International banks are lobbying hard to water down the draft rules, saying they would have to raise so much new capital that economic recovery and lending would be jeopardized.

China broadly supports reform of the international financial system but officials rarely comment specifically on the proposed reforms.

If we implement these principles, standards, framework and many of those important rules early, it would be highly significant to helping China narrow the gap with advanced countries, promote financial reforms and strengthen our financial stability, Yi said.

On Friday, the eve of the G20, U.S. lawmakers hammered out a historic overhaul of financial regulations in a domestic victory for President Barack Obama.

(Reporting by Samuel Shen, editing by Lucy Hornby and Miral Fahmy)

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