Sarkozy has a lot to gain from China

The global financial market has deteriorated severely over the past few months. The whole world is pondering how to respond to the financial turmoil fuelled by fears over eurozone's debt crisis and poor economic performance on both sides of the Atlantic.

On the other hand, China has the world's largest foreign exchange reserves, valued at more than $3 trillion, which gives it plenty of opportunities to invest overseas. To spread out the risk, China's central bank has diversified its investment over the past decade, one of which was to buy assets in euros as an alternative to US dollars. Since more than a quarter of China's foreign reserves today are in euro assets, its reaction or response to the eurozone debt crisis will have direct implications on market confidence and the European Union's relief actions.

But so far, China has played a supportive role and committed itself to painfully tackling the escalating EU debt crisis, because it realizes that its own interests could suffer if the turbulence continues.