Enduring partnership

China-France trade maintains stable development despite headwinds

The future of Chinese-French business ties will be bolstered by the goods trade and enhanced cooperation in areas including aviation, digital technologies, green development, high-end manufacturing and trade in services, said market watchers and business executives.

The degree of interdependence in bilateral cross-industry trade between China and France remains stable, despite the headwinds and challenges such as the waning global demand and rising global trade protectionism that have emerged in recent years, said Cui Hongjian, director of Beijing-based China Institute of International Studies' European Studies Department.

"With China entering a new era of green and innovation-led growth, the country will continue to export consumer goods in exchange for France's high-tech products such as electronic products, passenger aircraft, vehicles and parts, and medical equipment," said Cui.

As Chinese and French economies have been disrupted by challenges ranging from the COVID-19 pandemic to geo-economic fragmentation, the total trade between China and France declined 4.4 percent on a yearly basis to $81.23 billion in 2022, data from China's General Administration of Customs show.

In addition to passenger vehicles and aircraft, water treatment equipment, and chemical and pharmaceutical products, France's exports to China also include fashion, agricultural and energy infrastructure products. China's exports to France are mainly construction machinery, manufacturing equipment, steel, electronics, textiles, garments and household appliances.

"Most of the imports are complementary. Therefore, there isn't any direct competition," said Zhao Ping, vice-dean of the academy of the Beijing-based China Council for the Promotion of International Trade.

Apart from boosting trade volume, she said China's ongoing consumption and industrial upgrading boom has also attracted more French investment to China in many commercial areas such as high-end manufacturing and green development in recent years.

Echoing that sentiment, Jean-Pascal Tricoire, chairman and CEO of French multinational Schneider Electric, said that after operating in China for 36 years, the group is confident and firmly committed to its long-term development in China.

"We will continue to strengthen our 'China hub' strategy and enhance our advantages in innovation and collaboration, and better enable local partners and customers to accelerate their digitalization and decarbonization transformation," he said. Benefiting from China's opening-up, Schneider Electric has achieved great success.

It has grown from a joint venture factory to a company with 29 factories and distribution centers across the country. China has become the company's second-largest market around the world.

To reinforce its local innovative strength, Schneider Electric put a power supply and energy storage-themed innovation facility into operation in Shanghai in January.

The research facility will provide solutions to meet the customer needs through strategic positioning and foresight around the megatrends of high-power platforms, standardization, digitization, automation and green development, said Yin Zheng, executive vice-president of Schneider Electric's China and East Asia operations.

SUEZ Group, a Paris-headquartered environmental solution provider, also pledged to further strengthen its market position in China, which it believes "will remain one of the company's top growth areas".

As the Chinese government has continued to prioritize environmental protection, massive growth opportunities for foreign companies are being created made across the country. Sabrina Soussan, the group's chair and CEO, said she believed such opportunities would offer excellent prospects for foreign companies to contribute their technology and expertise.

The French company had built more than 400 water and wastewater treatment plants in China by the end of 2022, providing drinking water and waste services to over 25 million people.

In terms of seeking new growth points at a broader level, Bai Ming, deputy director at the Institute of International Market of Beijing-based Chinese Academy of International Trade and Economic Cooperation, said that the tangible growth of the Belt and Road Initiative will help both China and France further realize their goals for economic growth in many practical and innovative ways.

He said the initiative can efficiently boost regional infrastructure connectivity, people-to-people exchanges, investment and trade activities on an effective multilateral cooperative platform not only in Eurasia, but also in Africa and Latin America.

Similar views were expressed by Li Jin, chief researcher at the China Enterprise Research Institute.

"Many countries' surging demand for infrastructure improvements — such as next-generation oil refineries, new energy vehicles, modern factories, roads, airports and container ports — will provide opportunities for both French and Chinese banks, project designing firms and contractors, material providers and equipment manufacturers."

"China's proposal to explore third-party market cooperation could bring benefits to both Western nations and developing countries involved in the BRI development, without causing a clash of interests," he said, adding projects involving China, France and some French-speaking African countries are a case in point.

According to a report released by the CCPIT in late March, the top five European Union member states with the best business environment, according to surveyed Chinese companies, are Germany, France, Italy, the Netherlands and Spain.

The report — Business Environment of the European Union 2022/2023 — provided by the academy of the Beijing-based CCPIT, said that a favorable business environment is a common expectation of foreign-invested businesses.

The study found that 28.7 percent of surveyed domestic companies will expand their investments in Europe if the EU relaxes its foreign investment review. About 40.87 percent will increase their investments in Europe if the Comprehensive Agreement on Investment between China and the EU is signed and implemented.

China and the EU reached an agreement in principle for the CAI in December 2020 after 35 rounds of talks spanning seven years.

The European Commission described the CAI as "the most ambitious agreement that China has ever concluded with a third country" and one that "will ensure EU investors achieve better access to a fast-growing 1.4 billion consumer market and competition on a more level playing field in China".

However, the European Parliament blocked the ratification of the CAI due to political reasons in March 2021.

As the CAI is considered a balanced, high-level and win-win agreement that benefits China, the EU and the world, China has been keen to deepen mutually beneficial cooperation with the EU, maintain stable and unimpeded global industrial and supply chains, and create a sound environment for European companies, including French businesses, to maintain robust growth in its market, said Zhang Yongjun, a researcher at the Beijing-based China Center for International Economic Exchanges.

Eager to boost China's foreign trade, Wang Linjie, spokeswoman for the CCPIT, said the agency to date has received 519 applications, submitted by domestic organizers for overseas exhibitions by the end of March.

These trade fairs will be held in 47 countries, including the United States, France, Germany, Japan, Thailand and Brazil.