President Macron made his fourth trip to China to keep France on the radar of the Middle Kingdom. To get back on the path to sustained growth, France must become an investment destination for Chinese companies. They must establish factories and research centers there. By developing new capabilities for innovation, such a strategy is a way to meet the objectives of the Draghi report. But the paradox in Europe is that all countries are doing this in a competitive manner. And we are seeing a flurry of investments in Spain, Hungary, Germany, and France.
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The dynamics with regard to China have changed radically. Initially, China was perceived as a country capable of low-cost production. Along with other Asian countries, it was the ideal location for relocating production before bringing it back to Europe.
However, manufacturers quickly realized that the Chinese market was ripe for growth. And the Beijing government encouraged foreign investment coupled with technology transfers.
For Westerners, there were multiple benefits to seeing China open up. First, lower production costs, and second, increased wealth for the Chinese people, which boosted the local market. Furthermore, Westerners hoped that integration through trade would pave the way for a transition to democracy.
Although the Chinese have become richer and integrated into the global economy, they have not shifted towards democracy and, particularly since Xi Jinping came to power in 2013, have accentuated the political dimension of Chinese power.
Were we naive in our approach to China?
Before being naive about China, France was naive about the model it projected onto itself. It considered it advantageous to transfer its industry to China in order to produce more cheaply while controlling the entire production chain. This was unrealistic and reflected a self-centered worldview.
The resulting dependence only really appeared at the time of Covid, highlighting a dependence perceived as unbearable and which does not appear to be reversible in the short term.
Our attitude towards China is more one of nonchalance. China has surprised us and continues to surprise us, but this hasn’t fundamentally changed our attitude.
The French are now seeking to benefit from technology transfer by wanting to establish Chinese factories on French soil. This is a way to innovate locally while maintaining the social model of the French economy.
France’s attitude toward China was characterized by nonchalance rather than naivety. The naivety lay in the model France projected for itself. The nonchalance lay in assuming that China would adapt to our standards.
