French
president Emmanuel Macron’s visit to China this week is the first by a major
European leader since the Communist party’s recent leadership congress, and
Macron, profiting from Trump’s incoherences and from the situations of blockage
in which Angela Merkel and Theresa May find themselves, will use it to try to
secure greater access for French companies.
In his
first official visit to the world’s second-largest economy since his election
last May, Macron is expected to push for a more level playing field in trade
relations, as France tries to cut a 30 billion-euro trade deficit with China.
By
reciprocity, French officials mean easier access for foreign companies to
regulated or protected sectors of the Chinese economy. Chinese officials say
that concept is “relative” in an emerging economy.
Like other
Westerners, the French have long complained about China’s rules for foreign
investments and its demands for technology transfers and compulsory
joint-ventures with local rivals.
French
carmakers Renault and Peugeot-Citroen in particular have had to set up
partnerships with domestic companies but have had only limited success in
gaining a slice of the world’s biggest auto market.
French
officials hope the emergence of a prosperous Chinese middle-class will give
French companies, which tend to specialise in consumer products, an edge over
German rivals more focused on machinery and equipment.
But besides
the usual race for market share, Macron’s advisors say he will also defend a
common European Union line for freer trade between the blocs, in the face of
U.S. President Donald Trump’s protectionist rhetoric.
As an
economy minister in the previous Socialist government, Macron led the fight to
toughen EU anti-dumping rules imports of cheap Chinese steel surged. In June,
he also urged the Commission to build a system for screening investments in
strategic sectors from outside the bloc, which drew criticism from Beijing. A
delegation of 50 company executives, from nuclear giants EDF and Areva, plane
maker Airbus and hotels group Accor, as well as representatives of the French
beef, pork and milk lobbies are expected to travel with Macron.
Airbus is
in talks to sell 100 or more jetliners to China during the visit, sources said.
Slowly, the
Chinese manage to creep into the economy of many Western countries, sometimes
even by proxy. This will be the case with at least part of England’s energy
infrastructure, where the Chinese can penetrate through their French partners.
Thus, on in October 2014 it was announced that Britain would sign with
Electricité de France (EDF) for the building of a nuclear plant, composed of two reactors close to Hinkley Point, in
south-west England. It is expected that the plant would produce 3,260
megawatts, that is 5-6% of UK’s total consumption. It would be the first
nuclear plant to be built in UK since 1995 and it is supposed to be functional
in 2023.
The problem
is that an important part of the money used to build it will be Chinese. The
cost of the two EPR’s (Evolutionary Power Reactors) built by the French Areva
will be as high as 16 billion Euros, which EDF cannot assume by itself. So EDF
turned to the two Chinese nuclear giants CNNC (China National Nuclear
Corporation) and CGN (China General Nuclear Power Group), with which the French
company started working already three decades ago. The two Chinese companies
will own together 30% to 40% of the shares in the British plant.
By entering
a joint-venture with EDF in building the nuclear plant in England the Chinese
would also enter the British energy market, where EDF is dominant, after having
bought British Energy in 2009.
As the EDF
case shows, Chinese companies have long invested in strategic sectors in
France. The Chinese are present even in the French tourism sector. Club Med has
allied itself with the Chinese Fosun conglomerate, whose operating activities
include insurance, industrial operations, investment and asset management.
China is thus on track to becoming the second biggest market for Club Med after
France itself.
Airbus has
allied itself with the Chinese Avic, in an effort to get onto the Chinese
market. GDF Suez sold to a Chinese company (China Investment Corporation ) 30%
of its gas-producing sub-branch.
Another big
French company that the Chinese might soon penetrate, and which has a symbolic
status in France, is Peugeot-Citroën. This family-run company offered the Chinese
Dongfeng to buy half of a 3 billion Euros capital increase (the other half
going to the French government), in exchange for 20% to 30% of the shares. The
Chinese say they are still considering the offer, but this could simply be a
bargaining trick, knowing that Peugeot-Citroën is making serious losses.
For Western
countries, spreading the red carpet in front of the Chinese could have serious
political consequences. Chinese representatives sit already on the Volvo board
in Sweden, as they will in France if the deal with Peugeot receives the green
light from Beijing. On top of being politically cumbersome, such intrusions
would mean that the Chinese will also have access to technologies and obtain an
inside picture of the functioning of key industries in some Western countries’
economies.
Criticising
China would also become more difficult for elected officials on whom pressure
would be applied from the industrial sector and lobbyists.
https://www.neweurope.eu/article/macron-visits-china-profiting-from-trumps-incoherences/