Strengthening Sino-French ties

Mutual benefits in 'green' economy, innovation and tourism

Michael Amouyal

France and China established diplomatic ties in 1964, but despite an early start, the relationship only began to bloom 30 years later, quite late compared to Germany.

Though Sino-French economic relations continue to progress today, the amount of trade and investment is imbalanced. France is China's third-largest trade partner in Europe while China is not only France's No 1 trade partner in Asia, but also its largest source of trade deficit, ahead of Germany.

France is now looking for more key challenges and opportunities to help China and also prove that France is a country of excellence.

Growing trade

As we celebrate the 50th anniversary of diplomatic ties between the two countries, China may not be considered a "future emerging market" anymore - it is an almost required opportunity for all French companies, major groups or SMEs. It is a market in constant evolution and mutation.

The major jubilee on the 50th anniversary of formal ties provides the opportunity for France to try to rebalance bilateral trade much more in its own favor. According to French statistics, in 2013 the trade deficit reached 25.8 billion euros ($29.1 billion).

China is France's second-largest supplier after Germany, but France is only China's 19th supplier. With a 1.2-percent market share in China in 2013, France is ahead of the United Kingdom (1 percent) and Italy (0.9 percent), but very far behind Germany (4.8 percent).

President Francois Hollande stated that on the political side, the two countries have an excellent relationship, but France needs to rebalance external trade. Over the years, cooperation has deepened between France and China in numerous areas such as civil nuclear technology, aeronautics, agribusiness, sustainable cities and new technologies.

During his most recent visit to France, President Xi Jinping concluded several contracts for a total of 18 billion euros, a record and a strong signal in bilateral relations. Many political and cultural activities were organized during the anniversary but the key issue remains the economic relationship.

Historically, France did not take advantage of its early political presence in China. Even if for a certain period of time French companies were the only ones to enter the Chinese market, several did not dare to invest. Today the trade deficit is a key preoccupation for France, but competition in the Chinese market is impressive and China has trade surpluses with many of its partners.

The rapid development of China in recent years brought up a new and critical topic: Chinese investment in France.

Since President Hollande's first official visit to China in April 2013, France is rolling out the red carpet to Chinese investors in France and has called for "removing the barriers and bottlenecks to Chinese investment in France".

On the 2020 horizon, France will receive $15 billion of Chinese capital flow each year compared with only 4.4 billion euros in 2012. More and more Chinese companies are interested in investing the French market.

New areas

Today in addition to traditional sectors of cooperation like nuclear energy and aeronautics, new areas of collaboration have appeared.

Last year, French Minister of Foreign Affairs Laurent Fabius' visit to China had the themes of environment, climate change, tourism and France's attractiveness. He insisted on French external action in all sectors - the economy, culture, politics, trade and tourism. "Everything is closely linked," he said.

Indeed, Chinese are the second-most important long-haul airline clientele in France and it is a priority to promote and enhance France as a tourist destination and to take into account the characteristics of Chinese tourists.

In 2014, France concluded an agreement with Ctrip.com, the first travel booking website in China, to better promote France as a tourist destination to the Chinese, and to provide Atout France - a public agency for tourism development - with updated information on e-tourism in China. Atout France will assist Ctrip in building offers to France with French operators.

The rising living standards and increasing health expenditures, the growing urbanization and aging population in China, are further opportunities for French companies in the health sector.

All major French groups are present in China and benefit from a good reputation due to the excellent French healthcare system. A club for French companies from the health sector operating in China was set up in April 2013.

France also aims to defend its position on environmental matters, with the priorities on climate change, sustainable development and water issues. Its action aims to accompany the Chinese transition to a low-carbon economy and enrich the partnership while valuing French expertise.

To help French companies to extend France's influence and stimulate the local French business communities, the French Chamber of Commerce and Industry in China is present to provide solutions and coordination for the problems and challenges companies are facing.

The objective of the chamber is to play a leading role in the service of French companies to help them develop their business, share information, initiate projects and develop pivotal partnerships.

The visit of Prime Minister Manuel Valls to China at the beginning of the year is another sign of the great vitality in the relations between the two countries. This is the first visit of Valls to China.

A delegation of French businesspeople accompanied him with the intention of signing contracts with Chinese partners. During his visit the Prime Minister outlined the attractiveness and excellence of French knowledge in industrial innovation, the green economy, energy performance and transport.

It is another intense moment for the development of issues like the strategic partnership, bilateral relations with important content, powerful and symbolic gestures and many agreements. The visit marks the end of the 50th anniversary and certainly the start of a new more dynamic era between the two countries.

(China Daily 01/31/2015 page5)