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AB 2000 studies

Alain Boublil Blog


China ; The new economic diplomacy

The French president will travel to China in the coming days before going to Japan and South Korea. He will not make the same mistake than some of his predecessors. The first State visit in Asia of a foreign political leader must be in the Chinese capital if he wants to create a climate based on mutual respect. The condition is necessary but not sufficient. He must also be well informed about major orientations of those who are going to talk with him and he must show it. If he doesn’t, he would be considered as an ignorant or, worse, as an adversary because he wouldn’t have taken into account his hosts objectives. In both cases, it would be impossible to establish a mutual respect environment which is the condition to reach tangible results.

China foreign policy has deeply changed since Xi Jinping coming into power. Today, it is much more focused on economic issues than in the past when trade problems where predominant. It was necessary to address criticisms and to avoid sanctions due to the growing trade surplus of the country. China ambition today is to find its place in the international and economic relationships and that this place contributes to its domestic policy objectives. The country has not anymore the vocation to be a delocalization zone or the factory of the world. That situation, which was to be transitory, is not anymore compatible with a substantial and continuous rise of the standard of living of the Chinese population. President Xi understood that and his answer is the Belt and Road Initiative. It makes reference to the old Silk Roads which structured trade between Asia and Europe during the Middle Age. But the historical comparison has some limits because the Initiative goes much further. Through the support of infrastructures projects in neighboring countries, China favors their development; its own exports and its companies which realize public works. That strategy is not without internal policy considerations. It contributes to the rebalancing in favor of the Western and the Northern provinces of the country which will reduce tensions with Uighur and Tibetan minorities in these areas.

BRI has first been focused on the strengthening of the relationships with the 10 members of ASEAN. Highest level meetings were regularly organized by Beijing with them and with India, Japan, South Korea, Australia and New Zealand. They profit from Donald Trump decision to denounce Trans-Pacific Partnership. If he did want to send these countries under China influence, he wouldn’t have found a better method. High-speed railways lines are on construction starting in Kunming, the Yunnan capital toward Laos and Thailand with extensions in direction of Malaysia and Singapore. They will make trade development with these countries easier. The construction of a new high-speed line will permit to connect Kowloon station in Hong Kong to Canton in less than one hour against two hours today. It will accelerate the integration of the former British colony. Another major Agreement with Pakistan, to which Afghanistan has joined, has been concluded. Its purpose is to create an Economic Corridor, starting from Kashgar to join the Pakistan’s harbor of Gwadar, on the Arabian Sea. It will include highways, railways, pipelines and optical cables and will also profit to the Xinjiang province.

Europe and Central Asia constitute the other major part of that strategy. There was first the giant contract concluded with Russia in 2013 concerning oil and natural gas deliveries and the construction of two natural gas pipelines to supply China Central and Northern provinces. It will offer to Moscow receipts which will partly compensate the losses caused by prices fall and international sanctions. Chinese oil giant, CNPC, participates to the major oil and gas Yamal project in the Arctic Ocean. Methane tankers will carry to China LNG during summer months. BRI targets also former Soviet Union countries in Asia and it is through these projects that it inscribes itself in the historical tradition of the Silk Roads. Railways have been opened and permit to supply Europe in cutting by half transport times compared to seaborne trade. Natural gas contracts have been concluded with Turkmenistan along with the construction of pipelines to supply the country. Kazakhstan is not left down and tenths of industrial projects will be financed there. A “Eurasian Economic Union” has even been created along with an “Association of the Eastern and Central European Countries”, the 16+1, group which received the visit of Prime Minister Li Keqiang at the end of November. The meeting was held in Budapest. Eleven Eastern countries which joined the European Union after the fall of the Soviet Union were participating along with Albania, Serbia, Montenegro, Macedonia and Bosnia. Once more, the purpose of this body is to study and to finance infrastructures in order to make trade between Europe and China easier, with, notably, the construction of the high speed line between Belgrade and Budapest.

France cannot allow itself to ignore that new step of the globalization which will have major industrial consequences. The cement industry, where France has been a leader for years, is a good example. The world N°1 is now the Chinese group CNBM. It plans to build during the coming years about one hundred plants which will receive the financial support from the institutions created under the BRI policy. Its CEO, Song Zhiping, has even been elected chairman of the World Cement Association in London some days ago. France has missed two opportunities in China where it could have been a major actor because its expertise was recognized for a long time, natural gas and high speed trains. It is unfortunate but it is too late now. We stayed on the departure platform. On the opposite, Airbus has smartly decided to build an assembly line in Tianjin. Instead of seeing in it a threat, as many commentators do, we must recognize the value of that initiative. It can open the way to other partnerships. It is the same regarding nuclear industry. The first power plants were built in Daya Bay by French companies. EPR, which is so criticized here in France, is also built in Taishan and it will be put in operation before Flamanville power plant because Chinese companies, working with Areva and EDF, have learnt lessons from the difficulties occurred by the first models. China is interested by a major innovation, the Mox, a nuclear fuel made through recycling used ones. It is a new opportunity. The development of nuclear power in China contributes, along with natural gas, to the reduction of coal share and of CO2 emissions. It is a priority for the country, confronted with massive pollutions in many major cities and the reason of the undisputed support by Beijing of the success of COP 21.

In that field, as in many other ones, including infrastructures, France and China have common objectives. Let’s take advantage of that through partnerships instead of bashing the country, putting into question its successes and forecasting, against obviousness, its imminent fall. If we don’t, others will take our place.               


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