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AB 2000 studies

Alain Boublil Blog


China and France

The visit of the president Xi Jinping has given a good image of the personal relations between the two heads of States but has not brought any progress, regarding the major geopolitical stakes as about the economic relations between the two countries. The celebration of the 80th anniversary of the recognition by France of the Popular Republic was more a pretext than an historical demand because it was important that, in the current tense international context, any opportunity was good to take to exchange positions. But that does not mean that concrete results were inevitably obtained and these ones have been small if not non-existent.

The will to appear like contributing to the softening of the tensions is laudable but it is yet necessary that the influence of this one who assigns itself such an objective is real. But France alone is not a major power. On the political and military issues, only the United States, China and Russia can have this claim. Europe is divided on most of the issues and France voice is listened but its influence is limited. On the economic subjects, it exists only three major actors, the U.S., China and the European Union. If the participation of the president of the Commission during this visit was a strong signal, the absence of the German Chancellor was taking out to these meetings any one-to-one character.

The travel to Hungary of the Chinese president, a few days after his stay in France, well shows that his will was not to open a constructive dialogue because he was going into a country which was notoriously hostile to the Commission policy and in a disagreement about the attitude toward Moscow. The announcement of the construction of an electric vehicles factory, representing a several billion euros investment, when no such project had been discussed with France, testifies of the distance which has been instituted between Beijing, Brussels and Paris.

Along with the strong critics about Human Rights, the pessimistic and even caricatural presentation of the China economic situation has been used to minimize the lack of concrete economic results after the Xi Jinping visit. The country is facing difficulties and these difficulties constitute a threat for the French and European economies. So was the diagnostic. Measures must be taken to protect ourselves and they are studied. But the U.S. have not waited and have just announced significant tariffs increases. The economical context of that visit was so presented like that.

Against the forecasts made in Western countries, Chinese growth is not weakening, staying, in accordance with the government objectives, around 5%. It is definitely inferior to the figures of the Glorious Thirties which were most frequently above 7%. But this comparison does not make sense because the size of the Chinese economy has hugely increased. We also worry about the very low inflation, which is a paradox since in Europe, the top priority is to make it falling under 2%. At last, it is touched on a general overcapacity phenomenon which would explain the country huge exports with reduced prices which would hurt European and American companies.

Washington reacted with the instauration of tariffs and with the vote of a massive program of public aides to enterprises which invest in the country, at a time when, precisely, Beijing is accused to give subventions to its ones to win market shares. The only sector in China which is in overcapacity and which knows a real and deep crisis is real estate. But it is the situation of all the countries which have reached a certain development and wealth level and which have been confronted to at least once in their history. Beijing has at its disposal the financial tools allowing to avoiding a major banking crisis and, with the time, these supply unbalances will be absorbed and the sector will recover normal conditions. But the overcapacity concept has also be applied to several industrial sectors to explain the strong growth of the production and of the exports, without the lowest relevance.

In the globalized economy we know, enterprises are not investing only to satisfy the demand of their internal market. Their production capacities are fixed in function of their project to supply the world market. Chinese companies, which have been during a long period the subsidiaries of the Western groups and after, their sub-contractors, have acquired enough know-how to become, at their turn, international groups and so competitors. The country produces one and half million of engineers every year and has become an exporter of products created and made in China with their own brands. It is this mutation which has not been anticipated and which is badly understood.

The example of the electric vehicles is revealing. In order to reducing urban pollutions and the CO2 emissions, as in so many other countries, the Chinese government has adopted supporting measures in favor of these vehicles. Results are spectacular. During the first four months of the year, total vehicles sales increased year-on-year by 5.6% to reach 7.52 million units with an increase of electric vehicles sales by 34.4%. The exports results are quite also impressive: 1.83 million exported vehicles, i.e. a 33.4% increase year-on-year, with 420 000 electric vehicles, a 20.8% increase. Chinese authorities explain this gap by a lower interest than in China for these vehicles.

Similar results are observed regarding batteries and solar panels. The critics formulated in Europe are paradoxical. These three industrial goods are decisive elements of the energetic transition because they allow a reduction of the recourse to fossil fuels. China has launched with determination a policy in that direction because the country is one of the biggest greenhouse gas emitter and its industry has been able to answering to this demand. The lead, won in the constitution of the production chains and the size effects have given a major competitive advantage to these enterprises which allows them to getting a leading position on the world market and to contributing, outside of China, to the reduction of the emissions. We would so be wrong to condemn this new trend and, as it has just been decided in Rumania, to stop a huge solar panels field, under the pretext that these ones are produced in China.

Instead of nourishing critics, that noticing could have given, during the discussions with China in France and at Brussels, the start of reflections about the creation of industrial partnership, contributing to the fight against climate warming where everybody would be the winner. Unfortunately, and that has been already the case in France with the nuclear power plants construction and the thermal engines vehicles, these partnerships have been abandoned. The opportunity was offered with the visit of the Chinese president to reopen them in order, instead of denouncing the positions taken by the Chinese companies, to establish partnership with their European homologues. It has been missed.

Everything is like if a special attention was given in the relations between France and China to the subjects which were not open to have concrete repercussions on the international relationship and if, to the contrary, the environmental and industrial subjects, capable of offering real successes were ignored. That results from a misunderstanding of the Chinese economic model with all the profits the French economy could take from it which by large overpass the sales of luxury products.