Economic Cooperation to Play Stronger Role in China-France Relationship
SHANGHAI – Several high-level trade deals were signed between China and France during President Xi Jinping’s three-day visit this week as one stop on a wider European tour. In the largest of these agreements, French investors were granted a RMB 80 billion (US$12.9 billion) quota to invest in mainland Chinese markets as part of a campaign to promote the yuan as an international currency.
Other deals focused on the automobile and aviation industries: Chinese automobile manufacturer Dongfeng purchased a 14 percent stake in its French counterpart PSA Peugeot Citroen and plans are in the works for China to purchase US$20 billion of aircraft from Franco-German manufacturer Airbus.
French exports of food and agricultural products, already popular in China, are expected to climb, especially in light of China’s recent decision to end an anti-dumping suit against EU winemakers.
France’s meat and dairy industries particularly stand to benefit from closer cooperation between the two countries, with talk of lifting long-standing restrictions on French deli meats and a continued series of high-profile mergers between dairy companies.
These deals come in the wake of a struggling French economy and record-high unemployment. Observers stated that France is hoping to use the economic boon of closer cooperation with China to cut into its 26 billion euro trade deficit. Meanwhile, China is eager to adjust its current FDI imbalance with France (16.7 billion euro of French investment in China versus 4.2 billion in the opposite direction) and benefit from French expertise in agriculture, food, hygiene, finance and urbanization.
Chinese state media was effusive in hailing the reception President Xi received in France and the “special status” of the China-France relationship.
Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam in addition to alliances in Indonesia, Malaysia, Philippines and Thailand as well as liaison offices in Italy and the United States.
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