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What French President Macron's Dispute With Chinese Trade Could Mean For Asia

This article is more than 6 years old.

“What do you think personally of Mr. Xi Jinping?” an American journalist asked the new French president, Emmanuel Macron, during Donald Trump’s visit to Paris in July. Trump, speaking first, said the Chinese president is “a terrific guy. I like being with him a lot.” Macron wasn’t so pally: “I cannot say that [Xi is] a friend of mine or that I know him very well.” Although he did go on to say that Xi is “one of the great leaders of our world,” he noted that there “are issues, there are differences, but a joint willingness to sort them out.”

These “issues” and “differences,” which center on trade, were inherited by Macron when he took up residence in the Élysée Palace in May after easily winning the second round of the French presidential elections with two thirds of the vote. For some, Macron’s victory was a sign that the drawbridge of populism would not lower completely over Europe. But the “globalist” candidate, who ran against the “protectionist” Marine Le Pen, as media accounts were fond of stating at the time, has now called for a “protection agenda” in Europe. “I am for free trade… but I am not for naivety,” he said in June. By naivety, he meant the European Union’s massive trade deficit with China.

France is China’s third-largest European trading partner. And China is France’s sixth-largest trading partner. Bilateral trade was worth an estimated $73 billion last year. But China also accounts for France's largest bilateral trade deficit, thought to be in excess of $30 billion annually. The EU as a whole had a trade in goods deficit with China of more than $200 billion last year. “Like Germany, there is a concern in France that China might become too powerful,” said Philippe Le Corre, a visiting fellow in the Center on the United States and Europe at Brookings Institution, a think tank.

Bloomberg

The China Deficit

Macron wants to build an “alliance” in the EU to limit the ability of foreign companies to take over European strategic industries. By “foreign” he chiefly means Chinese. One such takeover happened in May when China’s state-owned ChemChina purchased the Swiss agrochemical giant Syngenta for $43 billion, the largest Chinese overseas takeover to date. (Berlin and Paris were reportedly angry that the European Commission approved the takeover.) And now Europe fears that if more Chinese state-firms purchase its leading developers of advanced technology then it will put the continent at an economic and technological disadvantage. More important is European access to China’s market. Chinese investment in the EU rose by 77% last year but “EU acquisitions in China fell for the second consecutive year,” Reuters reported.

Le Corre rightly said that “it’s not just Macron’s effort.” Indeed, German Chancellor Angela Merkel is also thought to be a supporter of the move. And last month her government introduced regulations that can stop purchases of German strategic firms by foreign companies.

But the French president has been its loudest advocate. Yet, he met with disappointment at the European Council summit in June. There, he spoke of “the disorder of globalization” but some other EU leaders – reportedly those from the Scandinavia, and those in the east that have become more financially dependent to China in recent years – opposed his demand that the European Commission examines “ways to screen investments from third countries in strategic sectors.” Instead a tamer version was accepted.

Macron’s Asia Policy

Much of this comes back to Macron’s promise to make a “Europe that protects Europeans.” It is also an indication, some say, of how short-sighted his global retina is. Indeed, during his campaign analysts noted that little time was spent discussing international issues. Ben Judah, a contributing writer at Politico, noted that Macron’s foreign policy views are “largely unformed” and, instead, are “informed by a broad coterie of policy advisers and French grandees.”

Jean-Yves Le Drian, his foreign minister, who was defense minister under the previous administration, is one such grandee. As the defense minister Le Drian made 20 visits to Asia and was a regular speaker at the Shangri La Dialogue, Asia’s leading defense summit. There, in 2016, he said that France will engage in freedom of navigation operations in the South China Sea, a controversial maritime area over which Beijing has clashed with rival claimants for years.

But Macron could now advise his administration to stay clear of any such antagonistic actions, analysts say. “With me it will be the end of this sort of neo-conservatism that has been imported to France over the last 10 years,” he said in June. Or, rather, his so-called “Gaullist” instincts will see French foreign policy realign to its traditional spheres of influence – West and North Africa, and the Middle East – at the expense of greater interest in the Asia-Pacific.

Is It All About China?

“The neo-Gaullism of the new French president, under the influence of advisers like Jean-Pierre Raffarin or Emmanuel Lenain, well known for their China tropism, could translate into a limited vision of the Asia-Pacific,” Valerie Niquet, head of the Asia program at the Foundation for Strategic Research, a French think tank, wrote in the Diplomat in June.

More recently, she told me that “we don’t know what Macron’s Asia policy will be yet,” but added that “it’s obviously not one of his priorities, in contrast with the Hollande presidency.” Indeed, Macron’s predecessor, François Hollande, swiftly moved France away from its traditional China-centric outlook and focused instead on other parts of Asia.

In a recent essay, François Godement, head of the Asia and China program at the European Council on Foreign Relations, described this as France’s “pivot” to Asia and noted that during the 18 months after Hollande became president there was a total of 33 visits to Asia by government officials, almost triple the number than in the previous two years. “The only Asian countries that no French minister has visited are Bangladesh, Brunei and East Timor,” Godement wrote of the Hollande years. Macron’s Asia policy remains rudimentary but, Niquet said, “the danger is [if] Macron equates ‘Asia’ with ‘China’, leading to disappointment for the other major players in the region.”