Chinese confidence

During a brief stopover in the Chinese capital on Thursday, French President Nicolas Sarkozy was told by his Chinese counterpart Hu Jintao that China was confident about the European economy and the euro.

Sarkozy's office had let it be known in advance that the French president would discuss the sovereign debt crisis in Europe and French leadership of the Group of 20 nations that will culminate in a Cannes summit in November. Meanwhile experts in Beijing had divined that Sarkozy was coming "to ask China to buy the government debt of southern European countries," as Jin Cangrong of China's People's University put it to AFP.

At their meeting, Hu expressed confidence in the euro but told Sarkozy that China was keeping a close watch on the European debt crisis. He also urged Europe to safeguard Chinese investments. About a quarter of China's record foreign currency reserves of more than $3 trillion are held in euro assets. In other words, China now holds 600 billion euros ($865 billion) worth of European debt including those of Greece, Portugal, Spain and Hungary. In a commentary on Monday, the overseas edition of the People's Daily, the mouthpiece of China’s ruling Communist Party, compared Europe's sovereign debt crisis to "the Black Death in the 14th century."

A matter of confidence

According to the official Xinhua news agency, Hu told Sarkozy at their meeting in the Great Hall of the People. "We believe Europe has the wisdom and capability to overcome the current difficulties and maintain economic stability and growth," he said.

He added that China continued to consider Europe as one of its major investment markets and hoped that Europe would adopt measures to ensure the security of Chinese investments.

Sarkozy was quoted as stressing that the eurozone was strengthening its economic governance. He also reportedly mentioned measures adopted to advance financial reforms in "some nations" of the eurozone. AFP quoted the French President as saying that China and France "wish to make progress on the convertibility of the yuan but without rushing to see an integration of the yuan into the SDR," or the Special Drawing Rights basket of the International Monetary Fund.

Sarkozy was on his way to the French territory of New Caledonia when he made his five-hour stopover in Beijing.

Author: Arun Chowdhury (AFP, dpa, Reuters)
Editor: Anne Thomas