France’s Sarkozy woos China’s Hu before G20 seminar

By Yann Le Guernigou

BEIJING (Reuters) – France needs China’s support to help advance reform of world commodity and financial markets, French President Nicolas Sarkozy said before meeting his Chinese counterpart Hu Jintao on Wednesday, ahead of a seminar dealing with Sarkozy’s G20 agenda.

Sarkozy made the remarks in Beijing, which he is visiting before flying to Nanjing, the city in east China that will host a seminar of the Group of 20 wealthy and developing economies on Thursday.

That seminar was supposed to highlight Sino-French cooperation in promoting more regulation of commodity markets and exploring reform of the global monetary system, but Beijing has not exuded enthusiasm for the seminar or for Sarkozy’s broad plans during his government’s presidency of the G20.

The Chinese government has distanced itself from the Nanjing meeting, emphasizing that France is the organizer and China simply the venue. It has insisted that a small think tank headed by a retired vice-premier is responsible for the Chinese side of the planning.

Sarkozy nonetheless made clear he wanted the support of China, the world’s second-biggest economy.

“France, as president of the G20, needs China’s participation to make progress on all the big issues,” Sarkozy told an audience of diplomats and company executives when he opened a new French embassy building in the Chinese capital.

“In its G20 presidency, France needs China’s participation in order to make progress on all the big issues that concern us, from commodity prices, to limiting speculation, to monetary instability that risks setting back progress in improving competitiveness, and to peace in the world,” he said.

China has the world’s biggest pile of foreign reserves and about two-thirds are estimated to be held in dollar-denominated assets. Any sign that Beijing is disenchanted with the dollar would send shivers through world markets.

Sarkozy was due to meet Hu later on Wednesday.

In November, Sarkozy and his wife, former model Carla Bruni, received Hu with military honors during his state visit to France. Sarkozy said then that Hu backed France’s hopes to reform the global monetary system and would cooperate closely during Paris’s G20 presidency.

But since then, China’s ardor has cooled.

Sarkozy had promoted the expanded use of the special drawing right (SDR), the International Monetary Fund’s unit of account, as a global reserve currency that could eventually displace the dollar. China’s top central banker, Zhou Xiaochuan, initially floated that idea.

But a series of Chinese officials have said Zhou’s essay was an academic exercise, and Zhou himself has said he put the proposal forward to deflect criticism of China’s own currency, which many other governments say is artificially cheap.

This is Sarkozy’s fifth visit to China since he became France’s president in 2007. He and Hu are also likely to discuss the crisis in Libya. Beijing has criticized the Western air campaign in the north African country.

(Writing by Chris Buckley; Editing by Alan Raybould)

France’s Sarkozy woos China’s Hu before G20 seminar