Tribune. The health crisis and current geopolitical tensions are reviving concerns in Europe and France about globalization in general and economic relations with China in particular. Should we, and can we, decouple the French and Chinese economies?
In fact, France’s dependence on China is quite moderate. In 2020, China accounted for 4% of our exports and 7% of our imports. These figures are respectively 5% and 9% for the European Union. These overall results, however, mask major sectoral disparities. Thus, the food industry represents 18.7% of
French exports to China in 2020, and the automobile sector only 1.2%. Likewise, Chinese investments represent only about 5% of the stock of foreign investments in Europe; but while they had previously focused on a wide variety of sectors, they are increasingly focusing on sectors that are strategic for the Chinese economy, such as ports. However, they fell by 45% between 2019 and 2020, in a context of economic crisis but also of much stricter control of Europeans.
Decoupling the French and Chinese economies would consist in producing domestically what was produced in China and imported by French companies. It is also possible to diversify our commercial partners in order to be less dependent on China, and to limit Chinese investments in France and in Europe, especially in strategic sectors. This is all the more to be considered today as the program of Chinese President Xi Jinping, known as “dual circulation”, aims in particular to be less dependent on foreign investments and to have an international integration of the Chinese economy targeted on strategic priority sectors.
But the relocation of activities on the national territory covers very heterogeneous situations according to the sectors, but also according to the companies within the same sector. If a relocation had for reason the access to the Chinese market, the probability of a relocation on the national territory is of course very low. When Michelin builds a factory in China, it is to be as close as possible to Chinese consumers. Relocation to France would cause it to lose a large part of its competitiveness and market share.
The same is true when offshoring aims to benefit from low labor costs. The rise in labor costs in China has moreover encouraged French companies to turn to Vietnam or Bangladesh rather than relocate to France … Environmental costs are also a cause of relocation for highly polluting sectors, such as chemicals. . In this case, relocation is however possible if a carbon tax is introduced at the borders, so that companies are not disadvantaged by adapting to European environmental standards.
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“Should we, and can we, decouple the French and Chinese economies?” ”