* Hu arrives in Nice for talks on international affairs
* Hu pledges backing for France as G20 president
* Sarkozy to entertain Hu in upscale Riviera resort
(adds Hu's arrival in Nice, activists' arrests 12, 14-16)
By Kevin Yao and Emmanuel Jarry
NICE, France, Nov 5 (Reuters) - France told China on Friday that balanced trade and close cooperation was the best way to protect world economies from future crises and the menace of protectionism.
Shortly before Chinese President Hu Jintao and his French counterpart Nicolas Sarkozy were to hold talks in the Mediterranean resort of Nice, France's Economy Minister Christine Lagarde told Chinese officials and business leaders Paris wanted much more balanced trade relations with Beijing.
Concerns over global trade imbalances and the threat of "currency wars" will top the agenda at next week's G20 leaders summit in Seoul, after which France will assume the group's presidency with ambitious plans to push global financial reform.
"The strength of our trade is the best defence against the real risks from the financial, economic and social crises which have struck all economies, including France of course and China, of which protectionism is the most ugly threat," Lagarde said.
Sarkozy, who held earlier talks with Hu in Paris on Thursday, is using the visit to build relations and gauge China's position on his G20 agenda. French officials have said Beijing's backing will be crucial for its plans to diversify global currency reserves and stabilise commodity markets.
France has avoided any reference to sensitive issues such as human rights or China's yuan -- the weakness of which has affected trade flows and upset Washington and Brussels -- adopting a conciliatory approach it hopes will win over Beijing.
But Lagarde, who on Thursday said US monetary easing this week had reinforced the need for a shake up of the global financial system, raised French concerns over China's handling of intellectual property rights and the openness of its markets.
"We're not necessarily very proud to owe China our largest commercial deficit, 22 billion euros," Lagarde said. "We must pass to a sustainable economic cooperation founded on both a fruitful friendship and responsibilities."
In response, Chinese Trade Minister Chen Deming said Beijing was not deliberately targeting a trade surplus and would welcome a more balanced relationship, but Europe must play a role by ensuring its own markets were open for Chinese investment.
RIGHTS CAMPAIGNERS ARRESTED
Hu's two-nation visit to France and Portugal comes at a time when EU leaders have closed ranks with Washington in urging China to let the yuan appreciate more quickly, unsettling relations between Beijing and Brussels. China hopes this week's trip will ease those strains ahead of the Seoul summit.
Hu pledged on Thursday his backing for France's G20 agenda and together with Sarkozy oversaw the signing of around $20 billion worth of airline, petrochemicals and nuclear fuel deals, including contracts to buy 102 Airbus planes.
On Friday, he arrived in Nice to be greeted by Mayor Christian Estrosi, who is also France's industry minister.
Afternoon talks with Sarkozy were due to focus on international affairs, including Iran's nuclear programme, Afghanistan and Pakistan, and Africa, where resource-hungry Chinese firms are investing heavily in many French ex-colonies.
Human rights groups have accused Sarkozy's government of selling out to win Chinese favour. Reporters Without Borders said six people were arrested when protestors called for the release of a jailed Chinese dissident awarded the 2010 Nobel peace prize as Hu's car passed them on the Champs Elysees after he laid a wreath on the tomb of France's unknown soldier.
Police snatched away their big white umbrellas with "Free Liu Xiaobo" written on them.
"It is unthinkable that France, the country of human rights, is saying nothing about the situation of China's dissidents," said Reporters Without Borders head Jean Francois Julliard.
Sino-French relations have only slowly recovered since Sarkozy outraged Beijing in 2008 by meeting the exiled Dalai Lama, prompting some Chinese citizens to boycott French goods.
Later on Friday, Sarkozy will show Hu Nice's grand palm-fringed seaside promenade, one of the most-visited spots in France outside of Paris, and take him to dine at a downtown restaurant known for its fresh seafood. (Additional reporting by Daniel Flynn, Yann Le Guernigou, Jean-Baptiste Vey and Antony Paone; writing by Catherine Bremer; editing by Philippa Fletcher)