Sunday, October 29, 2006

France Looks to Improve Sino-French Relations

Sources: Reuters/CNN, International Herald Tribune, Euronews, Paris-Link

French President Jacques Chirac arrived in China midweek to forge and strengthen trade between China and France. This is Chirac’s fourth trip to China, and will be advocating for various agreements involving nuclear energy, aviation, rail transport, and finance industries. His goal was to “establish genuine strategic industrial partnerships with China.” He traveled with an entourage of 30 people which included top-level executives from various French companies. The visit by Chirac may also alleviate some tensions from the French sale of Mirage warplanes to Taiwan in the early 1990s.

His visit to China coincides with continuing and increased European Union pressure to improve market access for European goods. The EU is furthering the pressure on Beijing to liberalize various aspects of the Chinese economy—namely pressuring China to remove currency controls. These ties between France (and the EU) and China are critical, as over 800 French companies operate in China, and this is growing, as French exports to China have grown by over one-third in the first half of the year. Furthermore, Chirac is facing domestic pressure as Germany is racing ahead of France in Chinese investment. He has responded in the past year by preparing to deliver four nuclear reactors as well as signing multi-million dollar business contracts.

His visit has concluded in a positive fashion for France. Airbus, along with various other French companies signed over $10 billion in deals. The Airbus deal dominate the agreements, as the China agreed to purchase 150 Airbus commercial jets for $9.9 billion. Furthermore, he has continued to lobby for French state-controlled Areva, which is competing with Westinghouse to build additional nuclear reactors. Moreover, this is also viewed as the final opportunity for Societe Generale to win a $3 billion contract over CitiGroup.


1) How will other EU nations respond to the French overtures in China—especially in light of EU pressure for Chinese structural changes to their economy? In other words—will EU pressure for the structural changes be effective since EU nations are racing to invest in China anyway?

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