We remember the metaphor about soccer: it is a game you play between two teams with eleven players where, at the end, it is always Germany which wins. It has a little lost its actuality but the principle is still there and could be applied to economy. The world is permanently confronted with crisis, but whatever is the cause, at the end, it is always China to blame. The country has been at the center of the discussions inside the G7, the NATO and the meeting between the American president and his European counterparts this week. The regime lack of transparency during the appearance of the covid-19 in Wuhan or, very recently about the operating problems at a nuclear reactor in Taishan have been denounced as the Chinese navy maneuvers in the China Sea. The emergence of the Middle Empire among the world great economic powers has become a factor of geopolitical tensions.
The covid-19 pandemic has provoked an unprecedented world recession without any precedent since the 1929 crisis. But China seems to have better overcome it than the other countries. Despite its GDP sharp fall during 2020 1st quarter (-6.8%), the country is one of the only ones to have avoided recession last year. Its growth (+2.3%) may be one of the smallest of its recent history it is still real and quite different from the other major economies. The rebound in 2021 is quite also spectacular: +18% during the 1st quarter on a year-on-year basis. The figure profits from a very favorable basis effect because the recession caused by the pandemic occurred just a year before. But on two years, it well seems that Beijing has regained the lost production and has recovered its annual growth rate trend of 6%, which constitutes the official target for the current year. But the IMF is more optimistic and has an 8% growth forecast. The very strong increase of the consumption since the beginning of the year as the exports growth (+30%) seems to comfort this prediction.
So the sanitary crisis would have profited to Beijing. The tough restrictions measures would have allowed the country to control the pandemic faster than in the other parts of the world. Constraints imposed to Chinese tourist would have forced them to spend inside the country. It is especially spectacular regarding luxury goods which were frequently bought outside the country or in duty free shops in the airports. So l’Oréal sales in the country have beaten all their records. China has also taken advantage of sanitary and pharmaceutical products demand coming from countries which were not able to produce them for themselves. To pretend, at the end, that the country which was at the origin of the crisis is the country which has been on the economic field, the main benefactor is a step which starts to be made by many commentators.
International comparisons are aggravating these tensions. Everything is as economy was functioning as the Soccer Premier League with a position obsession. China with a higher growth than the other developed countries, and especially the United States, would have sooner or later the highest GDP in the planet and become the “first world economy”. Then geopolitical consequences are drawn and the U.S., relegated in the second position would have to consider that as a threat, qualifying Beijing as a “systemic rival”. But this comparison is absurd because China is four times more populated than the U.S. and so, the level of life of its population is one quarter of American population one. To consider that it is a danger for the world geopolitical equilibrium that Chinese population increases its level of life to reach Western countries one is, there too, absurd.
That is especially that the China take-off has been, by large, the consequence of American and Asian companies strategy, followed after by numerous European firms, which have de-localized there their productions and transformed the country into the “factory of the world”. Nobody, and definitely not American leaders, has interest in this take-off, which has not only profited to the Chinese people, breaks off, even if its nature has changed with the emergence of large groups high technology level sectors. Instead of coming into a confrontation scenario, it would be better that a partnership logic is instituted which would profit to everyone. It is probably in this prospect that the American president is inscribing his action, breaking with his predecessor’s one. To start his future discussions with Beijing, in the best possible position, he has renewed with the multilateralism logic, regained his European allies trust and offered his hand to the Russian president during his meeting in Geneva.
Another critic regarding China, the New Silk Roads, is another metaphor which send us back to the Middle Age era and to the first exchanges between Europe and the Middle Empire. Through financing transport infrastructures dedicated to bring its production toward neighboring countries, Beijing is a winner through three points. Its building companies are getting markets. Related countries will develop faster and become suppliers and clients. At last, country exports will be facilitated thanks to these new transport modes. The project has gone beyond Central Asia to reach Southern Europe with the acquisition and the upgrading of the Piraeus harbor, quite a symbol, and Africa where China will more easily find strategic commodities.
In reality, everybody could be the winner and European critics which were supported by the Trump administration, are, there too, absurd. Through contributing to the development of all these countries, what Europe and notably France would have done for a long time, everybody is the winner. It is not possible to be the advocate of the fight against under-development, to do not give the necessary means and to criticize these who are achieving that duty instead of you. Atop of that, these new infrastructures are not “one-way” ones. They will facilitate goods exports to China. Germany has immediately understood that.
At last, the Beijing commitment regarding climate is not linked to electoral tactics. But the high growth the country needs to increase its population level of life necessitates a pursuit of the increase of its energy consumption. In order to reconcile these contradictory objectives, so China has launched the transformation of its energy mix with the modernization of its coal power plants, and their progressive substitution with natural gas ones along with massive investments in renewable and nuclear. About this last point, the press campaign, happily interrupted about the incident occurred in one of the two EPR reactors operating in Taishan, will not harm Beijing will to go on with its nuclear program. To the opposite, the malicious news in brief diffused in France risk to affect the possibilities of our companies to continue to participate to it.
China seems to have better overcome the pandemic that many other developed countries and to have recovered a solid growth. But it is not for that we must worry and consider that this constitutes a threat. On the contrary, that will offer new and important opportunities to the companies which will know how to grasp them.