Sarkozy turns attention to China and global growth

Written by The Financial Times | Updated: Oct 29 2011, 07:52am hrs
By Hugh Carnegy in Paris

It was 4am at the end of the second gruelling eurozone summit in four days and a deal was finally done. But Nicolas Sarkozy was already thinking ahead to the next international pow-wow - the G20 in Cannes on the Mediterranean coast next week.

At his closing press conference in Brussels, the French president said he would be talking within hours to Hu Jintao, his Chinese counterpart, about preparations for the meeting of the leaders of the worlds leading economies.

For Mr Sarkozy, putting in place a fix for the eurozone was essential to staunch the sovereign debt crisis that threatened to tear Europe apart. But his next task, as current host of the G20, is no less than to fix the world economy.

A statement after the call to President Hu said they agreed to work closely to ensure the G20 makes a decisive contribution to global growth and stability.

The president, who faces re-election next year, appeared on national television on Thursday night for the first time since February to explain the deal reached in Brussels and how it, along with the G20, will help revive Frances own flagging economy.

Mr Sarkozy has made it clear he wants the November 3 and 4 Cannes meeting to be like the equivalents in Washington in late 2008 and London in April 2009, which were seen as galvanising international action to revive the economy after Lehman Brothers collapsed.

Mr Sarkozy is pressing for decisive moves to address debilitating structural imbalances between surplus nations, such as China and Germany, and deficit countries including the US and France itself. He wants surplus countries to sign up to specific policy pledges to promote growth, such as stimulating domestic consumption, while countries in deficit should show how they are taking steps to consolidate their public finances.

Other initiatives include ways of extending International Monetary Fund resources, international monetary reforms to prevent currency and commodity price volatility, regulation of systemically important banks and moves to spur stalled trade talks.

But with less than a week to go, people in contact with the preparations say it is far from clear how much concrete action will emerge from the meeting, with surplus countries notably reluctant to sign up to specific growth measures, and familiar scepticism over any possibility of serious movement on trade.

None of this will deter Mr Sarkozy and the second instalment of the summit double-bill is set to be lively.

The Financial Times Limited 2011