Xi Jinping’s Visit to France: Sino-French Economic Relations Still Strong
Xi Jinping’s visit to France in late March marked the 55th anniversary of official relations between the two countries.
The event came just over a year after French President Emmanuel Macron paid a state visit to China, which confirmed the two countries’ desire to maintain their global strategic partnership.
One year later, the relationship between the two countries has seen some friction. The European Union (EU) – led in part by France – has adopted a tough stance towards China’s economic practices, including Xi’s Belt and Road Initiative (BRI). Italy’s decision to fully endorse the BRI was therefore controversial, exposing the disunity among EU members in their perception of China’s connectivity ambitions and its investments in their respective economies.
While Macron’s ambitions to unify Europe’s position on economic and political relations with China may have hit a roadblock, Sino-French bilateral relations continue to move forward, following Xi’s visit.
Bilateral trade at a glance
China is a significant trading partner for France. The country is France’s seventh largest market for exports and its second largest source of imports. France also has more than 1,100 companies with a presence in China, which provide about 570,000 jobs.
France, however, holds a substantial trade deficit with China. According to a report published in 2018 by the French government, France imported an estimated €49 billion (US$55 billion) in goods and services from China in 2017, representing 18 percent of the country’s total imports.
Going the other way, France exported an estimated €19 billion (US$21 billion) in goods and services to China, making up six percent of France’s total exports and leaving it with a €30 billion (US$33.8 billion) trade deficit.
French exports are mainly in the aeronautics sector, which was up 33 percent in 2018 compared to 2017; agro-food products (up 21 percent); cosmetics (up 33 percent); and pharmaceuticals (up 15 percent). The goods imported from China were mostly low value-added products, such as textiles, mechanical and household equipment, and furniture.
Although China and France have experienced some tension in their recent bilateral ties, particularly on issues relating to national security and the trade deficit – the two countries managed to conclude several agreements during Xi’s visit.
These developments helped underscore the French position that China is an important economic partner, despite there being areas of distrust.
Most significantly, China finalized its order of 300 Airbus planes – worth €30 billion (US$33 billion) – thanks to the partnership between Airbus and China Aviation’s Supplies Holding Company. This contract was initially set up in 2018 during Macron’s official visit to China.
Other agreements reached between China and France include:
- An agreement worth €1 billion (US$1.12 billion) to set up a wind farm project in China was signed between EDF and China Energy Investment Corporation (CEIC).
- A memorandum on the creation of a Franco-Chinese cooperation fund estimated to be worth €1 billion was signed by BNP Paribas, Eurazeo, and the China Investment Bank.
- A memorandum worth up to €6 billion (US$6.74 billion) was signed by BNP Paribas in the framework of co-financing, but this time with Bank of China.
- A strategic partnership agreement aimed at industrial upgrading worth €6 billion between Schneider Electric and the Power Construction Corporation (PCC).
- A global framework agreement to build 10 new ships, worth €1.2 billion (US$1.25 billion), signed by CMA-CGM and the China State Ship Building Corporation.
Strengthening international cooperation and multilateralism
According to statements from both leaders, China and France agree that multilateralism and international cooperation is key to preserving peace and prosperity in the world.
Macron said it is necessary to develop a strategic partnership – at the EU-level – in building relations with China. “Beyond the bilateral relationship, we have placed the question of partnership between China and Europe at the center of our discussions,” Macron said.
Among other things, France and China pledged to support the WTO and G20 reforms as framing the basis for international economic cooperation. Both sides also agreed to work on the 15th General Review of IMF Quotas.
Environment and sustainable development
Cooperation on environmental goals emerged as an important issue in talks between Xi and Macron. The two presidents have made the environment a key issue in their domestic agendas and are expected to attend the UN Secretary-General’s Climate Summit, scheduled for September 23, 2019.
Xi and Macron emphasized the importance of a reorientation of public and private financial flows to fight climate change and protect biodiversity, as well as the need to prohibit the entry and exit of products of environmental crime, such as poaching and unhealthy exploitation of fauna and flora.
The two countries also plan to work together on implementation agreements reached at the COP 15 UN environmental conference, namely those relating to protecting biodiversity in China. Both countries also support international action against plastic pollution of the ocean and land by strengthening the Basel Convention’s arrangements.
China and France also welcomed the adoption of the G20 operational principles and pledged to ensure the compatibility of international funding, especially in infrastructure, with the Sustainable Development Goals as well as the Paris Agreement on Climate Change.
In the context of sustainable development, China and France intend to accelerate the implementation of the 2030 Agenda for Sustainable Development and the Addis Ababa Action Program.
Sino-French relations going forward
China is a key trading partner for France and the prospects for growing French exports remain significant.
In addition, recent market openings in China, such as in the automotive sector, present new opportunities for French companies.
The fact that Xi’s visit to France focused on the two sides continuing to work together is ultimately more significant than the content of their agreements.
The Chinese side, in particular, took a positive view of the visit, with China’s ambassador to France stating, “The ties between China and France have never been closer today and the will of the people of both countries to become familiar and closer has never been stronger.”
While Xi’s visit does not mark a fundamental shift in Sino-French relations and did not resolve their outstanding concerns, it signaled that the two sides are still open to expanding their economic ties.
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