Reciprocity can help advance B&R in Europe

Source:Global Times Published: 2017/5/22 18:53:40

Francois Godement Photo: Courtesy of Godement

Editor's Note :

Emmanuel Macron has taken office as France's new president and observers are trying to figure out what he has in mind. How will he craft his China policy? Will he pull France and Europe away from the populist tendencies? Global Times (GT) reporter Wang Wenwen talked to Francois Godement (Godement), director of the Asia and China Programme and a senior policy fellow at the European Council on Foreign Relations, on these issues.

GT: Macron's presidential win is viewed by many observers as a sign that France, among other European countries, will stay with internationalism. China is a firm supporter of globalization. What does Macron's win mean for China?

It is first of all a vote for Europe - the deciding factor in the election debate was about the euro currency. President Macron came out by far as the candidate most favorable to the deepening of European institutions, including such areas as the common budget. His campaign included openness to others - refugees, but also foreign business that respects rules.

His track record includes decisions in favor of Chinese investment, such as the sale of part of Toulouse Blagnac airport, and he paid a noted visit to the family of a Chinese immigrant killed in an incident with the police. But he has also come down firmly, and again recently, for reciprocity in economic relations, and signed, as minister of the economy, a letter with his German colleague calling in general for anti-dumping action by the European Commission. Overall, his government will work firmly for European unity. China - and the US - will have to take this into account.

GT: With Brexit seemingly inevitable and far-right parties on the rise in much of Europe, some also worry that Macron's election is just whistling in the wind. What is your view?

Brexit is not contagious at present. Growth in the UK is now below average EU level, and the prospect of tough negotiations has unified the rest of the EU instead of weakening it. The nationalist and populist right failed in the recent Dutch elections, and has also failed in France, where this was closely watched. It is possible that the apparent difficulties of the Brexit process and the controversies in American domestic politics are turning people away from extreme votes. Of course, more growth and less unemployment in Southern Europe (including France) are essential to make this a long-lasting trend.

And Macron is starting an experiment: to put it simply, unite moderates and reformers from both right and left, leaving more rightist and leftist politicians and voters isolated at the two ends of this block. In Germany, coalition governments often happen. In France, this is not easy with our majority voting system that favors right-left frontal opposition, but Macron has a good chance of success.

GT: The turning inward of the West comes as China turns outward with its Belt and Road initiative (B&R). What is your prediction on future trends? With Europe seemingly less interested in this initiative, what will be Macron's approach?

First, I agree with your question that the West - Europe and the US - have turned inward in recent times. But this applies to strategic choices for the US and to national politics for Europe. The US public has grown weary of engagement in foreign conflicts. Many Europeans would prefer to live as a peaceful island shielded from conflicts, from immigration, and from refugee flows that are the consequence of conflicts in the Near East and of poverty in Africa. The demand by voters for safety is paramount.

But this does not apply to the economy. Trade and investment of Europe with the outside world has grown. In 2015, FDI flows from the EU to the outside world reached 537 billion euros (about $600 billion), the EU stock of outward FDI was nearly 7 trillion euros ($8 trillion).

Both the EU and member states welcome the B&R. But you are right that there are questions. The EU has a current account surplus, the markets are capital-rich even if public budgets are tight. What is needed is outside investors ready to accept market risks, not merely lenders. Europe has open rules for public markets. Chinese companies, which have achieved wonders in developing economies, are in a process of learning these open market rules, and the Chinese government should encourage them.

But there is also a question of public opinion. This is where some reciprocity helps. China still has a bad memory of the era when its railroads were owned by foreigners, a century ago. Reciprocal opening would reduce fears and prejudice in both China and Europe.

In this respect, I believe Macron will come out both in favor of openness and for respect of rules. His ambitions for more European growth require liberal and competitive economic policies.

GT: How will trade and investment issues affect China-France ties and will they prevail over political matters?

It is fortunate that the two have tended to move independently in recent years, and this in fact is also a Chinese policy. Well-known successes of Chinese companies in Europe speak for themselves: in France, the investment by Dongfeng into PSA is a model.

France is the country in Europe that has received most immigration from China or from overseas Chinese. It is the country that receives the most Chinese tourists in Europe. China is the first source of trade deficit for France. It is very difficult to say that France is closed to China.

As the Chinese economy becomes a world-class competitor, it becomes very hard to avoid the opening of new sectors in the Chinese economy. It is likely that France will move within the European Union to negotiate new openings.

GT: How will Macron position France and the EU strategically in relation to the US, China and Russia?

Macron is the first French president who speaks, during his campaign, of a "European sovereignty," and calls for a new stage of European integration. The ministry of foreign affairs is now renamed the Ministry of Europe and Foreign Affairs. These views are still controversial in a country which has a strong national identity and heritage.

Although Macron has not expressed this, one might say that he intends to be a European patriot, and that this is the best defence of French interests in a dangerous world. He is a very fluent English speaker, and at least three of his ministers speak fluent German. His starting relationship with Russia is difficult. He has also strongly criticized the dominant position of some American IT and Internet firms.

There is a key difference between Russia and China with respect to Europe. The Russian government and official media often campaign against the very existence of the European Union. Their priority is political - it is a competition on the European continent. China has sometimes used European divisions to further its own interests - something all big powers do. But it accepts the European Union as a political reality. It has more interest in clear rules that have created the world's largest market than in fragmentation. It is likely that Macron will build on these common interests and seek to expand them.

Posted in: VIEWPOINT

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