Resetting Trade Relations

Resetting Trade Relations

President Macron’s Recent State Visit to China

President Macron’s first state visit to China for three days in early January 2018 was fascinating as it happened at an interesting time.

It occurred in the context of the following. On the one hand, there is the EU’s trade protectionism and Macron’s ideas for a more integrated EU and the New Year’s address to the nation calling for Europe to be able to face China, and of course, his trying to position himself as the leader speaking on behalf of the EU.

A more global role

On the other hand, there is the view that this trip was an opportunity for bi-lateral trade deals and fits Macron’s ambitions to play a more global role on the international scene. Then we need to add into the mix the perception by some of China’s common preference for one-to-one negotiations and deals despite its more recent rhetoric at last year’s Davos meeting about supporting multilateralism and free trade globalisation.

The breadth and depth of the visit and areas of discussion were vast.

Strategic partnership

Both sides wanted to build on last year’s comprehensive strategic partnership talks covering economic and financial co-operation. They sought trade co-operation in areas such as nuclear power etc, especially in light of China’s vast market and its ‘One Belt One Road’ expansion seemingly offering vast economic and trade opportunities adding further impetus.

Indeed, Macron took about 50 chief executives with him to push for export contracts to boost growth at home given high unemployment and working class discontent about globalisation. As the French trade deficit with China is about €30B, his message included the need for greater sharing, balance and reciprocity in trade. This includes increasing anti-dumping measures and fairer practices in trade – opening up some protected Chinese domestic markets – while at the same time trying to limit what the French call ‘plundering’ – so enhancing the 2014 decree requiring foreign companies seek permission from the French state before buying companies in energy, telcomms, transport and health. None of these messages are ones the Chinese will be happy to hear.

Territorial interests

Talks also included climate change and security, given both countries are permanent members of the UN’s Security Council. Also, China may see France as an ally against Trumps’ America and Asian stance. Yet, tension may have arisen from Macron’s ‘Asia Policy’ as this includes its own territorial interests in the Asia Pacific and military co-operation deals and defence capacity building in the region with those facing China’s maritime expansion and South China Sea disputes and exploits.

All in all, Macron would have used his usual mix of flattery and threats to re-boot Franco-Sino trade relations towards a more balanced and collaborative format. Of course, this would have butted up against the inscrutable Chinese and the world’s second largest economy.

 

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