May 11, 2024

China-France cooperation: Jointly ushering in a new era

By: Azhar Azam

Chinese President Xi Jinping on May 6 delivered a speech at the closing ceremony of the Sixth Meeting of the China-France Business Council with the theme of "Building on Past Achievements to Jointly Usher in a New Era in China-France Cooperation."

He stressed that China is willing to engage in close, comprehensive communication and cooperation with France, to elevate bilateral relations to a higher level and achieve greater accomplishments.

Since France's recognition of China on January 27, 1964, relations between the two sides have generally been stable and growing steadily, raising the level of the "global strategic partnership" since 2004.

From a strategic perspective, the two countries have been engaged in a strategic dialogue that began in 2001, covering all areas of cooperation, including reforming global governance, climate change and regional crises. In contrast to the U.S., whose approach toward China is deliberately offensive, and which expects its allies to do so, Paris follows an independent foreign policy and is pursuing an economic and strategic alignment with Beijing.

As President Xi said "as one of the earliest participants in China's reform and opening-up, France has contributed to China's modernization drive and benefited from it. Deeper friendship calls for frequent exchanges and closer cooperation." France is China's third largest trading partner and China is the third largest source of real investment in the European Union (EU). France is China's largest trading partner in Asia and seventh largest in the world.

China and France have reached several economic and financial agreements. For instance, at the ninth China-France High-Level Economic and Financial Dialogue in July of 2023, they agreed to adopt a joint approach on multilateral and global challenges and accelerate international economic recovery, reaffirmed their willingness to push quality and sustainable infrastructure investment and made a commitment to advance cooperation on climate change, biodiversity conservation, multilateralism and facilitating bilateral trade, among others.

In defiance of the U.S.-led decoupling strategy, France has been looking to strengthen relations with China. During his visit to Beijing in April, French Foreign Minister Stephane Sejourne clearly expressed the French desire not to decouple from China, seeking to rebalance the economic partnership, echoing French President Emmanuel Macron's stance last April that warned Europe of reducing trade and diplomatic ties with the world's second largest economy, seen as denunciation of decoupling as a trap.

Macron is very much vocal in his criticism of the U.S. and his support of European strategic autonomy. Washington "has two priorities. The U.S. first, and that is legitimate, and the China issue, second. And the European issue is not a geopolitical priority for the coming years and decades," he said, reiterating his call that the EU should never be a "vassal" of the U.S.

This is precisely the view most Europeans share. A multi-country poll by the European Council on Foreign Relations last year found that 74 percent of Europeans wanted to see the bloc less dependent on America's security guarantees and become self-reliant in foreign policy. Contrary to the EU de-risking approach, Europeans were reluctant to "de-risk" or decouple from China too.

The Elysée Palace seeks to slash its trade deficit with Beijing; and the gap is gradually narrowing as China's imports from France, as reported by Chinese customs, increased 5.5 percent in 2023. China's imports of French agricultural products for 2023 jumped 50.5 percent from 2019; and its consumer goods imports from Paris grew 12.3 percent annually over the last five years.

More and more French companies see China as a lucrative market as the Chinese government continues to address their concerns. Surveys showed profits of over half of the firms either increased or stabilized, and they were expecting better results in 2024 given they were optimistic about Beijing's economic growth in the next three years.

China – estimated to account for a quarter, nearly a third and around two-fifths of global cloth sales, jewelry and handbags, and cars respectively, as well as the largest market for machine tools and chemicals – is a big market of 1.4 billion people. Not only large but mid-sized and small and medium enterprises too have succeeded in China and there is great potential for them to capitalize on the country's new economic priorities and growing middle class and excel in areas such as consumer goods, agri-food, beauty and luxury products, health, innovative technologies and cultural and creative industries.

The China-France relationship has a long history with French companies getting involved very early on in iconic projects and with more than 2,000 operating in China. France's cultural and educational network across China and celebration of 2024 as the China-France Year of Cultural Tourism will solidify the relationship and people-to-people exchanges.

As two countries commemorate the 60th anniversary of their diplomatic ties, President Xi's visit to Paris, supplemented by a compelling chemistry between the two leaders, will inject far more impetus to the bilateral relationship.

By addressing rare differences, deepening existing and exploring new avenues of cooperation, a solid Beijing-Paris strategic partnership could also help de-risk the world from intense economic and security challenges and give a new vision of a peaceful, multilateral and economically rising world.

*My article that first appeared at the CGTN:

May 8, 2024

Trade war hurting Americans and fuelling geopolitical tensions

(axar.axam@gmail.com)

When the US Secretary of State Anthony Blinken visited China last year to “stabilize” the relationship between the two superpowers, strengthen high-level channels of communication, explore areas of cooperation and align China on shared transnational challenges – he gained the Chinese support on “all of that.”

His efforts soon panned out into a historic in-person Xi-Biden meeting – touted by the US President as “some of the most constructive and productive discussions we’ve had” – as China agreed to the longtime US demand of restoring military-to-military communication and curbing the production of fentanyl precursors.

As the Biden administration tries to manage differences, it is critical for Beijing and Washington to jump-start constructive and meaningful dialogue on trade and economy, in particular tariffs on each other’s goods that are hurting people and companies across the two countries.

Over the years, a bolshie policy of the past and current US administration has pushed America and China to an endless odyssey of economic rivalry, fearing Beijing in near-term could catch up or surpass Washington in economy and technology. In its insatiable quest for global economic and tech supremacy, America is deploying all tools to prevent this from happening through tariffs, sanctions, export and investment controls and restrictions of advanced chips exports.

This stubborn approach is hurting Americans and the US economy. For instance, most tariffs on goods from China are still in effect, inflicting significant harms to the US consumers, businesses and manufacturing competitiveness. The Section 301 and 232 tariffs on Chinese steel and aluminum as well as March 2024 petition to address China's shipping and shipbuilding practices continue to undermine the country's image as a champion of free trade, conceding more moral weight to China internationally.

According to the Tax Foundation, a vast majority of the increase in US tax collection ($211 billion of $233 billion) came from the Section 301 tariffs on China. These taxes were paid by Americans. Biden during his election campaign himself had acknowledged this fact, blaming Trump's tariffs for saddling Americans consumers, farmers and companies.

An early, promising completion of the US Trade Representative (USTR) review of the China tariffs could provide a relief to consumers and importers; it would also end uncertainty in the China-US relations, making a positive impact on the international economy. An average approval rate of 35% by the USTR, allowing imports from China in a couple of categories, is self-evident that this cannot be decoupled.

One of the major US concerns is its trade deficit with China. Even as America’s trade gap with China dropped by $102.9 billion to $279.4 billion, its deficit with Mexico surged with Mexico $21.9 billion to $152.4 billion. The data supports Xeneta's analysis that the Chinese firms were potentially rerouting its exports into the US through Mexico to circumvent the tariffs, weakening the US leverage in talks with China on economy and trade issues.

The Financial Times' analysis of the leading freight benchmarking firm further suggests Mexico is turning into a regional hub for Chinese companies for exports to the US. “Reducing reliance on China is an easy soundbite for politicians, but the reality is very different,” Erik Devetak, Xeneta's chief product and data officer, told the British daily. A BBC report also underscores how countless Chinese companies were relocating industrial parks in Mexico to bring production to the country to avoid US tariffs. Rather than the US, third countries such as Vietnam and Malaysia continue to reap benefits from the trade war.

A CATO Institute’s study recently concluded that irrespective of this being a problem, tariffs were not a "valid solution." Higher tariffs aren't either as they would drive Chinese companies to shift production to other states or cost $31 billion to American consumers, per the National Retail Foundation, and cut the US GDP by 0.5%, according to Bloomberg. Biden's plea to triple the tariff on steel and aluminum from China to appease the politically powerful steel industry and ban TikTok could help him charge his election campaign; it won't support his mission to stabilize the China-US relationship.

Before the tariff war, China was the fastest growing large market for the US. But retaliatory duties have positioned the US exporters, relying on Chinese components, at a huge disadvantage against competitors. Tariffs tend to heat up corruption, protectionism and appreciate the value of the US dollar, chastising the US manufacturers in terms of lower sales and profits.

China in the middle of the property crisis in Q1-2024 posted a strong growth of 5.3%, official data showed. The International Monetary Fund last year saw Beijing as the world's leading growth driver for the next five years; it retained its forecast this year, expecting the Middle Kingdom to remain the top contributor to global growth.

According to the US-China Business Council's recent report, exports to China in 2023 fell 4.3% to $144.9 billion; China remains an important market for American companies, supporting about one million jobs in the US. Further tariff spat between Beijing and Washington, it warned, could make other countries more competitive amid geopolitical tensions and economic slowdowns.

With a lot of restrictions already in place on China and military assistance of $61bn for Ukraine, $26bn for Israel to escalate the Israeli brutality against Palestinians and $8bn to “counter communist China,” in the Indo-Pacific, neither Washington can boast of supporting peace and standing up for human rights nor it could come out clean of fueling wars and conflicts.

On one side, America is mercilessly pouring American taxpayers' money to aid its military-industrial complex at the cost of human lives and on the other, the US government is making their and American companies' survival more difficult by threatening to wage a new barrage of tariffs, which will be potentially diverted to support Israel and counter China and Russia.

Experts agree tariffs could have unintended consequences for American consumers, companies and GDP, stating tax hikes as a “stopgap” measure to rein in overcapacity. Removal of bilateral tariffs would curtail America's ability to channel funds for its strategic objectives: they will slash inflation, create more jobs, eliminate shortage of goods, increase economic output and reduce geopolitical tensions. The US should opt for the latter.

*My article (unedited) that first appeared in the Express Tribune: