Illustration: Luo Xuan/GT
With the first round of the French presidential election taking place on Sunday, support for the far-left candidate Jean-Luc Melenchon has surged recently due to his good performance in the television debates. According to the latest polls, Melenchon's popularity is close behind the far-right National Front's Marine Le Pen and the centrist Emmanuel Macron.
In the financial market, there is already growing concern over the possibility of a Melenchon-Le Pen second round on May 7 if Melenchon's surge continues, as both candidates have threatened to leave the EU, which many believe would cause a "bigger catastrophe" than Brexit
Nevertheless, the polls lack sufficient representation with just some 60 percent of voters covered in the survey, so it is still unclear who will be the winner. So far Le Pen is generally expected to make it into the second round, but I don't think her odds of winning the election would be high, and the possibility of Frexit is almost nil.
However, even if the far-right party fails to win the presidency, it doesn't mean there is nothing to worry about. If the ruling party doesn't perform well, it is still possible for the far-right party to take power in the next election. Moreover, the far-right's anti-globalization sentiment is now spreading fast in major European countries, especially after terrorist attacks.
Frexit is a low-probability event, but assuming that it really happened one day, its impact would be much greater than Brexit. First of all, France is one of the six founding states of the EU, while the UK is not a founding country and its citizens' sense of belonging to the EU is not so strong as other EU citizens'. Last month, France's President Francois Hollande and other EU leaders celebrated the 60th anniversary of the Treaty of Rome, the organization's founding treaty. For a long time, France, together with Germany, has been making efforts to push Europe toward globalization and European integration. As such, if France left the EU, it would be a significant blow to Europe.
Moreover, Le Pen's Frexit claim also indicates that France may pull out of the eurozone, which could hit it harder compared with the impact of leaving the EU. Why? The French economy relies heavily on trade with other countries, because it is not a manufacturing country like the US, nor can it attract lots of foreign manufacturing investment. And due to its extensive welfare system, heavy corporate taxation burden and high labor costs, the French economy is losing growth strength, with many companies moving away. Against such a backdrop, Frexit would only make its economy worse.
Le Pen said that people are unhappy with the current economic situation, and France should come first and needs to reintroduce its own currency and take back control over the monetary policy. Her rhetoric sounds very encouraging, but the methods to boost growth are problematic and could make things worse.
Returning to the franc involves extremely complicated exchange rate issues and could lead to severe consequences. The British economy hasn't seen much impact from the financial market because its pound is not included in the eurozone. But the case is different with France, which would probably see great financial turmoil if it wanted to switch currency.
Even for China, Frexit would not be a good thing. In the era of globalization and free trade, China has great demand for bilateral investment and trade. If the EU, China's largest trading partner, experienced turbulence in terms of politics and economics, Sino-European bilateral trade would inevitably be affected, causing economic losses and stock market turbulence in China in the short term.
However, looking at it from a different angle, Frexit could potentially promote the development of the Sino-France relationship. China could maintain economic and trade ties with France and the EU at the same time as long as France does not oppose globalization. But the problem is that Le Pen advocates anti-globalization. If France carried out what she claimed, that would not bode well for Sino-France relations. But if she could adjust the policy and carry out friendly talks with China, that would be another story.
In general, China will continue to stick to globalization and is always willing to develop various forms of cooperation. Everything has two sides. Pulling France out of the EU could hurt trade and cause economic losses to China in the short term, but the EU and France may also strengthen their cooperation with China in the long term.The article was compiled by Global Times reporter Wang Jiamei based on an interview with Song Qing, a research fellow with the Shanghai Institutes for International Studies. firstname.lastname@example.org