Measures put eurozone on more solid footing

French finance minister says cooperation with China, other emerging markets to help European economy

On his first visit to China since taking office, Pierre Moscovici, French minister of economy and finance, expressed confidence in the European and French economies and vowed to promote reforms that will make France a stronger competitor.

"The crisis is not yet over, but you should feel confident in Europe's stability," said the 55-year-old member of the French Socialist Party. "Its ability to recover has been consolidated with the full commitment of European leaders."

Moscovici was appointed French finance minister following Francois Hollande's election as French president in May.

He said recent measures taken by European leaders have put the eurozone on a more solid footing in the past few months. Among those have been the European Stability Mechanism, which provides assistance to eurozone members that are having financial difficulties; steps to make Greece less likely to leave the zone; and an agreement to establish a euro-area bank supervisor.

He also gave high marks to the European Central Bank's pledge in September to use unlimited purchases of sovereign bonds to intervene in the bond markets.

"Last summer, EU governments faced a tough situation in the markets," Moscovici said. "This year, the market has been well oriented by the decisions of (Mario) Draghi, chief governor of the ECB."

He cited a recent auction of French bonds as evidence of confidence being strong in the French economy. The long-term bond yields fell to 2.07 percent in the Treasury's first debt sale of the year, which took place on Thursday.

He predicted Europe's economy will grow slowly or not at all in 2013, the US economy will fare slightly better and emerging economies will show strong growth.

He also said fiscal consolidation and structural reforms will aid in the country's recovery.

"First of all, we need to focus on fiscal consolidation strategies in the EU, and ensure that they are tailored to the circumstances in each country," he said.

"For France, we have a target that has not shifted - that is to reverse the debt spiral and to slash the public deficit."

Moscovici has said the French government will keep its 3 percent deficit target and 0.8 percent growth target for 2013, although international institutions and economists predict the country's deficit will be about 3.5 percent and its growth will be less than 0.8 percent.

He said there is a "difficult balance" to strike between reducing France's short-term fiscal deficit and middle- and long-term growth, and said steps should be taken to avoid the "vicious circle" that can cause austerity measures to lead to recessions.

He also called for reducing the country's structural deficit, making unprecedented reforms to its labor market, reducing government spending and ensuring public policies are more effective.

In November, the international rating agency Moody's downgraded France's government bond rating to Aa1 from Aaa, citing the country's deteriorating economic prospects and the long-standing rigidity of its labor, goods and service markets.

Moscovici said the government is taking steps to deal with these issues.

He also called for international cooperation, noting that China has an interest in ensuring the European economy is sound.

The European Union is the main trading partner of China, which, in turn, has bought a large amount of EU countries' sovereign bonds.

"I firmly believe the problems we face in 2013 will be easier to tackle if we step up cooperation with major emerging economies such as China," he said.

Vice-Premier Li Keqiang met with Moscovici on Tuesday. Li called on France to loosen restrictions on high-tech exports to China.

Moscovici indicated in his speech that his visit is intended to pave the way for a regular high-level economic dialogue between the two governments and prepare for Hollande's scheduled visit to China this year.

zhengyangpeng@chinadaily.com.cn

(China Daily 01/09/2013 page14)