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Published: November 3 2010 23:29 | Last updated: November 3 2010 23:29
France and China will discuss potential reform of the international monetary system when President Hu Jintao arrives in Paris for a three-day state visit, which comes on the eve of France’s presidency of the G20 group of leading nations.
Nicolas Sarkozy, Mr Hu’s counterpart, is keen to establish a common understanding on issues that will be raised during France’s leadership of the G20, which begins on November 13.
Mr Hu will also travel to Portugal on Saturday, following comments last week that China was looking favourably on the purchase of Portuguese government bonds, as Lisbon struggles to manage its fiscal crisis. The move follows similar signals towards bond purchases in Greece, which received an international bail-out earlier this year.
At at briefing ahead of the visit, Fu Ying, a Chinese deputy foreign minister, said China had invested consistently in the debt markets of European countries. She added: “We are confident that the measures being undertaken by the Portuguese government will help in restoring the economy and finances to normal.”
France is rolling out the red carpet for Mr Hu, with Mr Sarkozy taking the exceptional step of meeting the Chinese leader at the airport and returning through Paris with a contingent of the Republican Guard on horseback.
“There is one power that weighs more heavily than others,” said a senior presidential adviser. “These discussions have a very significant importance for the French presidency. We have to really understand each other’s positions.” The aim would be to “identify” common ground to avoid confrontation, he added.
Mr Sarkozy is hoping to win China’s support for measures to help reduce excessive volatility in exchange rates and commodities, as well as reform of global institutions.
China has shown a desire to play a more prominent role in international economic forums such as the G20, but is also keen to avoid commitments that allow for outside interference in its economic management.
Winning Beijing over is key to Mr Sarkozy’s own political credibility at home as the next presidential election approaches in 2012.
“Mr Sarkozy wants to make the [G20] presidency something which is politically bankable at the end of his term and for that he needs the Chinese,” said François Heisebourg, adviser to the Foundation for Strategic Research.
The visit will also mark a return to normal in the sometimes frosty Franco-Chinese relationship. A record number of commercial and industrial contracts would be signed on Thursday and Friday, more than on any previous state visit between Chinese and European leaders, the French official said.
Both countries are keen to improve ties after sharp disagreements in 2008, when Mr Sarkozy met the Dalai Lama and human rights protests marred the passage of the Olympic torch through Paris on its way to Beijing. China also hopes to restore ties with Europe after arguments with Washington over Beijing’s currency policy and disputed islands in the South China Sea.
Mr Hu will be hoping his European voyage will help fend off pressure over the renminbi ahead of next week’s G20 meeting in Seoul.
In a rare interview with Le Figaro this week, Mr Hu said China would continue to reform its exchange rate system, having abandoned its dollar peg in June, but avoided any specific commitments about the pace of future currency appreciation.
The government would “increase the flexibility of the renminbi, to maintain a relative stability of our currency at a fair and balanced level”, he said.
On his visit to Athens last month, Chinese Prime Minister Wen Jiabao announced that China would resume buying Greek government debt and Mr Hu’s visit to Portugal has sparked speculation about a similar move.
At the briefing, Ms Fu said that China had invested consistently in the debt markets of European countries. She added that “we are confident that the measures being undertaken by the Portuguese government will help in restoring the economy and finances to normal”.
Copyright The Financial Times Limited 2010
Nicolas Sarkozy, Mr Hu’s counterpart, is keen to establish a common understanding on issues that will be raised during France’s leadership of the G20, which begins on November 13.
Mr Hu will also travel to Portugal on Saturday, following comments last week that China was looking favourably on the purchase of Portuguese government bonds, as Lisbon struggles to manage its fiscal crisis. The move follows similar signals towards bond purchases in Greece, which received an international bail-out earlier this year.
At at briefing ahead of the visit, Fu Ying, a Chinese deputy foreign minister, said China had invested consistently in the debt markets of European countries. She added: “We are confident that the measures being undertaken by the Portuguese government will help in restoring the economy and finances to normal.”
France is rolling out the red carpet for Mr Hu, with Mr Sarkozy taking the exceptional step of meeting the Chinese leader at the airport and returning through Paris with a contingent of the Republican Guard on horseback.
“There is one power that weighs more heavily than others,” said a senior presidential adviser. “These discussions have a very significant importance for the French presidency. We have to really understand each other’s positions.” The aim would be to “identify” common ground to avoid confrontation, he added.
Mr Sarkozy is hoping to win China’s support for measures to help reduce excessive volatility in exchange rates and commodities, as well as reform of global institutions.
China has shown a desire to play a more prominent role in international economic forums such as the G20, but is also keen to avoid commitments that allow for outside interference in its economic management.
Winning Beijing over is key to Mr Sarkozy’s own political credibility at home as the next presidential election approaches in 2012.
“Mr Sarkozy wants to make the [G20] presidency something which is politically bankable at the end of his term and for that he needs the Chinese,” said François Heisebourg, adviser to the Foundation for Strategic Research.
The visit will also mark a return to normal in the sometimes frosty Franco-Chinese relationship. A record number of commercial and industrial contracts would be signed on Thursday and Friday, more than on any previous state visit between Chinese and European leaders, the French official said.
Both countries are keen to improve ties after sharp disagreements in 2008, when Mr Sarkozy met the Dalai Lama and human rights protests marred the passage of the Olympic torch through Paris on its way to Beijing. China also hopes to restore ties with Europe after arguments with Washington over Beijing’s currency policy and disputed islands in the South China Sea.
Mr Hu will be hoping his European voyage will help fend off pressure over the renminbi ahead of next week’s G20 meeting in Seoul.
In a rare interview with Le Figaro this week, Mr Hu said China would continue to reform its exchange rate system, having abandoned its dollar peg in June, but avoided any specific commitments about the pace of future currency appreciation.
The government would “increase the flexibility of the renminbi, to maintain a relative stability of our currency at a fair and balanced level”, he said.
On his visit to Athens last month, Chinese Prime Minister Wen Jiabao announced that China would resume buying Greek government debt and Mr Hu’s visit to Portugal has sparked speculation about a similar move.
At the briefing, Ms Fu said that China had invested consistently in the debt markets of European countries. She added that “we are confident that the measures being undertaken by the Portuguese government will help in restoring the economy and finances to normal”.
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