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11th Dec 2019

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Sarkozy: EU should welcome Chinese bail-out money

French leader Nicolas Sarkozy has said people should feel relaxed about China taking part in future EU bail-outs. But his political opponents warn there will be a price to pay.

Speaking in a 73-minute-long TV interview from the Elysee palace in Paris after the EU crisis summit on Thursday (27 October), he said: "If the Chinese, who have 60 percent of global reserves, decide to invest in the euro instead of the dollar, why refuse? ... Our independence will in no way be put into question by this."

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  • Sarkozy's TV address was broadcast from the Elysee palace after the 'summit to save the euro' (Photo: elysee.fr)

"Why would we not accept that the Chinese have confidence in the eurozone and deposit a part of their surpluses in our funds or in our banks?"

Sarkozy had earlier talked with Chinese President Hu Jintao on the phone about China's potential support for the EU's bail-out fund, the EFSF.

The head of the Luxembourg-based fund, German economist Klaus Riegling, on Friday also met with government officials in Beijing. He told a press briefing in the Chinese capital: "These are regular consultations at an early phase [of negotiations] and there will be no conclusions today during our visit."

Meanwhile, the Financial Times cited an anonymous source "familiar" with Chinese thinking as saying: "If conditions are right then something a bit above $100 billion is not inconceivable."

Official Chinese statements are more cautious, however.

Foreign ministry spokeswoman Jiang Yu told press on Thursday that "China is willing to make joint efforts to preserve the global economic recovery and growth." Chinese deputy finance minister Zhu Guangyao said EFSF involvement is "under discussion."

At the same time, Chinese state media and government-linked academics are warning that any participation will not be an act of charity.

"Emerging economies should not be seen as the EU's Good Samaritans," the Xinhua news agency said in an editorial. China is not a "global saviour" Wang Jian, the head of the National Development and Reform Commission think-tank told Dow Jones. "The last thing China wants is to throw away the country's wealth," Chinese central bank-linked academic Li Daokui told the Financial Times.

For its part, the left-wing French opposition voiced fears that China will seek to exploit its new role to influence EU politics.

China has long been unhappy about EU criticism of the weak reniminbi, used to promote exports, and its refusal to grant it market economy status before 2016. It has also bristled at EU criticism of human rights abuses and the union's long-standing arms embargo.

The shadow finance minister in the French opposition Socialist Party, Michel Sapin, told German media on Thursday: "Do you think China will support Europe without asking anything in return?"

French Green MEP Daniel Cohn-Bendit told Agence France Presse that Sarkozy's approach is "dangerous" and an "aberration". "Do you think the Chinese will give you money just because you are nice?" he asked.

China shows interest in sponsoring EU bail-outs

Chinese diplomats are awaiting a detailed proposal on taking part in the EU bail-out fund, the EFSF, while promising not to push for market economy status or lifting the arms embargo in return.

China urges Germany and France to solve euro-crisis

Chinese Prime Minister Wen Jiabao on Thursday offered vague promises to buy bonds from troubled euro-countries, but said that it is ultimately up to Germany and France to solve the crisis.

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