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Economic storm casts pall on French president's China visit

By Zhang Jian (People's Daily Overseas Edition)

16:41, August 29, 2011

Edited and Translated by People's Daily Online

On the afternoon of Aug. 25, French President Nicolas Sarkozy arrived in Beijing and met Chinese President Hu Jintao, and they jointly attended the evening reception. The leaders of China and France deeply discussed and communicated with each other regarding such subjects as the current global economic situation, the European debt crisis, the agendas of the G20 summit and China-France relations.

Sarkozy's current visit to China is just a short working visit on his way to visiting France's overseas territory New Caledonia, but it has attracted a lot of attention. The main reason is that the economies of France, the euro zone and the whole world are all in a dire condition.

The E.U. debt crisis is spreading, and meanwhile, the U.S. debt issue is intensifying, Japan's sovereign credit rating has been downgraded, economies of developed countries such as the United States, Japan and European countries continue to be gloomy, and the global financial and economic risks continue to mount.

It is still possible that the financial market will heavily impact the euro zone and France. For example, France's AAA rating is being threatened and pressed, France's Credit Default Swap (CDS) has sharply risen in a short period and keeps setting new records, the euro zone is having a new divergence of views on providing aid to Greece, and every country is arguing whether they should require Greece to offer pledges in exchange for loans.

The plans proposed during the France-Germany Summit, including the plan to establish an economic government for the euro zone, cannot solve the current urgent problems. All these things strengthened the wariness on the market over the ability of the euro zone to handle crisis. In order to cope with the sovereign debt crisis, France and Germany recently jointly proposed to increase the international financial transaction tax, which caused wide disputes. If the proposal cannot get the support of major countries such as China, it will hardly be practically implemented.

Given such a situation, people have held high expectations for the 2011 G20 Cannes Summit, which is to be held in November. As France holds the rotating presidency of the G20, Sarkozy urgently seeks some breakthroughs regarding major topics of the summit, such as the reform of the international monetary system, global economic balance and commodity price stability, in order to show France's diplomatic coordination skills as well as his own and gain support in next year's presidential election.

Sarkozy paid a special visit to China in March 2011 to participate in a high-level seminar on the reform of the international financial system, during which he held talks with Chinese President Hu Jintao. Sarkozy's current visit to Beijing is aimed at reaching the maximum degree of consensus with China before the G20 summit.
 
France and China currently face issues of common concern. China has always participated in global affairs as a large responsible country, including adopting a large-scale economic stimulus package that has ensured stable and relatively rapid domestic growth and in turn effectively advanced global economic recovery and actively expanded domestic demand while stimulating consumption.
 
Hu stressed that China agrees with the core issues set for the G20 summit and appreciates the fruitful groundwork France has laid for the summit. China will continue to support and participate in the summit, and work with all G20 members to establish a fairer international financial system because it will not only serve the interests of China, France and the entire European Union but also promote the stable and healthy development of the world economy.

As for the European debt crisis, Hu reiterated that China remains confident in the euro and the European economy. In fact, China has been making active and practical efforts to help the European Union solve its debt crisis by buying more bonds and increasing imports from Europe.

China values its relations with France and Europe, and there are no unsolvable conflicts of interest between China and European countries, including France. China and France and other European countries should build up strategic mutual trust amid the global financial market turmoil.

As mutual trust is a precondition for further exchanges and cooperation, greater strategic mutual trust between the two countries will promote both China-France and China-Europe relations and help pull the world economy out of the ongoing crisis. This is the main purpose for Sarkozy's visit to China.

The author is the deputy director of the Institute of European Studies under the China Institutes of Contemporary International Relations.

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