‘There’s a larger danger because of the present geopolitical local weather’

Issued on: 07/04/2023 – 21:04

Enterprise is within the air as Airbus introduced on Friday that it might ship 50 helicopters to GDAT, considered one of China‘s largest helicopter lessors. The announcement was made solely a day after Airbus pledged to double manufacturing in China by establishing a second meeting line at its Tianjin plant. In the meantime, French nationwide electrical energy firm Électricité de France (EDF) renewed its contract with Chinese language power large China Basic Nuclear Energy Group (CGN). Cosmetics chief L’Oréal sealed a take care of e-commerce platform Alibaba on ‘sustainable consumption’ whereas water and waste administration firm Suez clinched a desalination contract with China’s Wanhua chemical.  

This collection of freshly inked enterprise offers, highlighted by Macron’s journey to China, appears to present France’s constructive outlook on enterprise in China. FRANCE 24 talked to Mary-Françoise Renard, an economics professor on the College of Clermont Auvergne and director of the Institute of Analysis on China’s Financial system, to make clear present Sino-Franco trade relations.  

FRANCE 24: What sort of indicators do these enterprise offers ship? Do they signify a broadening of present commerce relations between Paris and Beijing?   

Mary-Françoise Renard: It’s  signal, in fact! It signifies that companies are going easily for French firms in China, so it’s excellent news. However this doesn’t essentially signify important modifications to present commerce relations between France and China because the just lately sealed offers are ready a very long time upfront. Regardless of this being President Macron’s first go to since 2019 to China, industrial transactions between the 2 nations have by no means ceased throughout this era. We did, certainly, witness all through the previous three years a slowing down attributable to constraints imposed by the pandemic, throughout which China shut down its borders. However it’s a part of the worldwide development, financial actions throughout international locations decreased in the identical interval. We’re actually simply selecting up the place we left it earlier than Covid.  

Regardless of a usually constructive outlook, a number of trade gamers have cited issues over persevering with to conduct enterprise in China and advocate for a extra cautious strategy. Do you share such issues?   

The issues [of French businesses trading with China] are effectively grounded. There’s a larger danger because of the present geopolitical local weather in addition to rising interventions from the Chinese language Communist Get together. Authorities intervention has already been closely current in China, however it has turn into rather more distinguished [China’s government has imposed party units in private companies since 1993, a policy that has expanded under Xi Jinping]. Corporations are left with little wiggle room, which inevitably results in a sure cautiousness, even wariness that was a lot much less noticeable up to now.  

Does that imply that solely multinationals and huge firms can afford to take the danger of buying and selling with China?  

I want to level out a particularity in France’s industrial cloth, which is removed from being new: France has a whole lot of giant firms and a whole lot of small firms. What we don’t have are medium-sized firms, opposite to Germany, for instance. And it’s a lot riskier for a small firm to export items, particularly to China. The corporate would want to rent export managers with good information of China’s market and know-how, which might be very expensive. It’s a lot simpler for giant firms, which already have the required assets at hand and might, finally, afford to fail. Sadly, attributable to structural causes and the present financial conjuncture, France doesn’t have medium-sized firms that may additionally afford to tackle such a danger.  

In accordance with statistics printed by French customs, France’s commerce deficit vis-à-vis China continued to widen to €39.6 billion in 2021, a now decades-long development. Is there any potential enchancment in sight?   

France’s commerce deficit is primarily due to the construction of the nation’s international commerce. We export varied companies to China which award us with surpluses (€6.1 billion in 2021), however we import rather a lot extra items (€77.7 billion in 2021) which finally leads to a deficit in our commerce stability with China. And the widening of our commerce deficit is partly the results of recovering family consumption in France in addition to rising industrial output, which drove the demand of imported supplies. Structurally talking, France suffers from a scarcity of competitiveness on items for family consumption, equivalent to electronics, clothes and different daily-use merchandise. The deficit is right here to remain, and [it’s not necessarily a bad thing] if we hope to keep the present stage of family consumption.  

The World Commerce Group on Wednesday printed a report forecasting a world lower in commerce progress to 1.7% for this yr. How a lot would this affect commerce between Paris and Beijing?  

After all, we can not exclude extraordinary occasions, or in any case, occasions that happen sooner than predicted equivalent to the Ukraine conflict. However within the present context of issues, it’s very seemingly that we’ll witness a slowing down of enterprise transactions between France and China attributable to excessive inflation, rising geopolitical tensions and protectionist insurance policies set in place by the US.

A part of the US’s protectionist insurance policies might be present in the Inflation Discount Act (IRA) handed final August that brazenly targets China.  Do you assume this divide would possibly carry Europe and China nearer?  

It’s very exhausting to foretell. The US’s insurance policies would most likely not instantly alter Europe’s financial methods in direction of China. The latter would most actually try to revenue and seduce Europe, because the US’s IRA alienates even its European companions. Nonetheless, Europe pursues a method that is extra centred on diversifying dangers than decoupling [from the US]. For now, Europe continues to develop its relations with China independently by way of commerce and dialogue.