Invalidating once more pessimistic forecasts made by observers, especially in France, Chinese economy had a good start in 2017. Growth rate reached 6.9% during the first quarter, significantly above the annual 6.5% target assigned by the government. It is not the only good news. The reversal of the American administration position is not less important. During his electoral campaign and before taking his new responsibilities, Donald Trump never missed the opportunity to denounce China negative role. He had promised to introduce heavy taxes on its exports to the United States and to condemn currency manipulations on the Yuan used to increase Chinese companies market shares. In the same time, the candidate declared he was close to Vladimir Poutine and on the same wavelength than him regarding his strategic choices, the support to OPEC agreement to make oil prices to rebound, which was also good for American producers, and to Bachar-el-Assad, in Syria. All that now belongs to the past.

The meeting, in Florida, with Chinese president Xi Jinping, in the private home of his American counterpart, choice whose symbolic character must not be underestimated, has permitted to reduce tensions. It is now out of question to massively tax Chinese imports and the United States do not anymore accuse China to manipulate its currency. This is obvious because during the last six months, Chinese currency was astonishingly stable. Fluctuations against the dollar were more the result of the uncertainties regarding American monetary policy than from the action of Beijing authorities which even had to support their currency in using their reserves. The improvement of the relationship with the United States is not the only good news recorded by the Chinese authorities.

The market crash during 2015 summer belongs to the past and Hong Kong (+10%) and Shanghai (+5%) stock markets rises since the beginning of the year shows the return of investor confidence regarding Chinese companies. Monthly figures, during the beginning of a year, always have to be taken with caution because they are affected by China New Year date. During that period economic activity usually falls. It is why quarterly figures give a better valuation of the real situation. During the first quarter, exports (+15%) and especially imports (+31%) rebounds were spectacular, even if this last number takes into account the rise of oil prices from the same period of last year. Power consumption, which gives a good picture of economic activity, has risen at the same rhythm than GDP, with a rebound in industry and services. Production has been supported by households consumption (+10%) and public infrastructures investments with three priorities : water, power generation with the development of renewable and the transformation of old coal power plants to reduce CO2 emissions, and transports. The huge program which consists in creating links with neighboring countries to, in the same time, support their development and Chinese exports through the “Belt and Road Initiative” is going on and will be the theme of an international conference in Beijng next May. The project even reaches Europe with the arrival in Germany of the first freight trains coming from Beijing. This is less costly and much faster than the traditional maritime ways. There are not less than 600 projects on the Chinese territory for an amount of investments of about 1 300 billion dollars. Chinese financial institutions are mobilized to get funds. The country created, two years ago, a new bank to bring its support to international projects and most of developed countries rushed to subscribe to its capital. Some are even saying, among the close circle of the two heads of state, that the issue of a Chinese participation in the investment program announced by Donald Trump during his electoral campaign would have been discussed between the two men in Florida.

Chinese growth transformation doesn’t only consist in a rebalancing in favor of household consumption through the acquisition of cars or travels all around the world. It concerns also the industry. China didn’t want any more to be the factory of the world and be used as a sub-contractor by foreign groups or supplier of major American retailer. Its brands are now recognized in their own country and are starting to be well considered abroad, through the support of a wave of direct investments and of acquisitions. But a new phase has started: to go from “Made in China” to “Made by China”. Companies, thanks to their research and development efforts are learning to master new digital technologies which are disrupting production processes. The ambition is to move from the situation of being the factory of the world to become the laboratory of the world. The local universities are turning out tens of thousands highly qualified engineers who are immediately hired by Chinese groups with, as an assignment, to transform production tools. Chinese competition is going to move towards more and more sophisticated products. Beijing has decided to create a new “special economic zone” in Xiongan, not far from the capital which needs to be unblocked. It will play the same role, for tomorrow Chinese industry, than Shenzhen at the very beginning of the reforms era.

This trend didn’t get unnoticed by some major European groups which participate last March to Beijing Forum. Siemens, Bosch and ABB CEO’s reaffirmed their commitment to that major industrial mutation. Siemens plant, located in Chengdu, the Sichuan capital, would be the first digital plant outside of Germany and is quoted as an example by Chinese authorities when they want to demonstrate that major European groups, for instance, when they want to invest in China, are not disadvantaged with regard to their local competitors; it seems that the only important French participant to this yearly event in the Chinese capital, was Michelin CEO. China is, by far the most important car market in the world, equivalent to the addition of European and American ones. The success of Peugeot restructuring is due to an alliance with a Chinese partner, Dongfeng, which made possible the development of its sales in the country. This success should be taken as an example, in particular in the nuclear industry where cooperation between our two countries is a rare case of a success of the French industry in China.

The year 2017 should be a good year for the Chinese economy, in despite of geopolitical uncertainties. It is not a happy coincidence: the renewal of the mandate of president Xi Jinping will occur during next autumn. We can be sure that the Chinese administration will do all what is needed to create a favorable economic environment. French companies would be well inspired to take that into account in order to take advantage of the opportunities existing in this country, as their German and Japanese competitors are doing for a long period of time.