Open Markets or Risk Protectionist Backlash

French President Emmanuel Macron focused on trade imbalances on the second day of his state visit to China, offering to open up France to Chinese investment in exchange for greater access to Chinese markets for French companies.

Speaking to members of the French and Chinese business community at a start-up incubator, called Soho3Q, in Beijing, Macron warned that existing bilateral trade imbalances would lead to protectionism, France24 reported.

“We have an access to markets which is unbalanced, unsatisfying,” said Macron. “If we don’t deal with this responsibly, the first, natural, reaction will be to close up on both sides.”

Macron was in China on his first state visit aimed at boosting trade relations as well as Sino-French cooperation on the global fight against climate change and terrorism, particularly in Africa.

Trade relations have dominated the agenda during his visit, amid concerns over China’s trade surpluses. France has a €30 billion trade deficit with China. Macron’s delegation includes around 60 business executives, including the heads of Airbus, Areva and luxury French brands such as LVMH.

Macron chose the setting to call for a level trade playing field. “He pointed to the fact that there are much more French investments in China than there are Chinese investments in France, and that he would like that to change, he said. The classic reaction would have been to close the market in response to China’s position as far as opening its own markets. “Well, what we want to do is the opposite: we want to open both markets to each other so that everyone can gain,” explained Macron.

Macron, who met President Xi Jinping on Monday evening, said the two countries would fall into a lose-lose situation if continued restrictions on foreign firms in China prompted France and Europe to put a brake on Chinese investment in Europe.

Macron launched his charm offensive in China Monday amid growing international concerns over Chinese expansionism.

Macron is hoping to seal deals, notably in the nuclear, aerospace and agrifood sectors. “We’re confident we’ll achieve more than symbolic stuff,” a French official said, on condition of anonymity.

French nuclear group Areva is close to signing a commercial deal to build a nuclear reprocessing plant, the official added. “We’ve never been that close to signing a commercial deal,” the official said.