China looking to strengthen ties with France after state visit

The governments of both China and France are hoping that French President Emmanuel Macron’s recent trip to China will strengthen trade ties between the two nations.

France and China are essential export markets for each other, with trade volumes reaching a record high in 2021.

According to data from the Huajing Industry Research Institute, the value of goods imported and exported between China and France in 2022 was $81.33bn, a 4.4% decline from the same period in 2021, with a decrease of $3.84bn.

As of February 2023, the trade balance between France and China showed a negative balance of $582m, with France importing $3.25bn worth of goods from China, and only exporting $2.67bn in return. When compared with February 2022, China’s exports to France decreased by 14.5%, from $3.12bn to $2.67bn.

On the other hand, China’s imports from France grew by $731m or 29.1%, growing from $2.52bn to $3.25bn, indicative of China’s wider economic recovery.

The Institute’s figures show that in February of this year China’s main exports to France were laboratory reagents, mobile phones, computers, passenger and cargo ships, and seats ($123 million).

Going the other way, France’s main exports to China in the same period were beauty products, packaged medications, trunks and cases, wheat and gas turbines.

In recent years, Chinese consumers have become a driving force behind the growth of the global luxury goods market. This has led to increased investment and co-operation between Chinese and French companies in this sector.

During the visit the Chinese ambassador to France, Lu Shaye, urged the French to remove barriers to Chinese investment and announced a range of agreements between the two nations. The ambassador disclosed that China and France would broaden their economic cooperation in several areas, such as aerospace, nuclear energy and agriculture, and explore opportunities for collaboration in green energy and technology.

Infrastructure has been one of the most significant areas of co-operation between France and China. French companies have been involved in several major infrastructure projects in China, including the construction of high-speed rail lines and metro systems, such as the Beijing-Shanghai high-speed rail line and the Shanghai metro system.

The bilateral investment relationship between China and France has been a vital component of their economic partnership. In 2015, during Xi Jinping’s visit to France, the two countries signed more than 50 agreements in various sectors, including nuclear energy, aerospace, and finance.

Similarly, during President Macron’s 2018 trip to Beijing, he announced France would sign contracts worth €13bn ($14.23bn) with China, covering areas such as agriculture, energy, and aeronautics. These agreements demonstrated the growing interest of French companies in the Chinese market and highlighted the potential for increased co-operation between the two countries.

The trip comes four years after his last visit to China. This time, the President was accompanied by a French business delegation composed of CEOs from the energy, transport, and aviation sectors. Macron reportedly hopes to secure some form of Chinese support for a peace process in the ongoing Ukrainian crisis.


Huge cuts to taxes for businesses

China is expected to reduce tax and fees for companies by 1.8tn yuan ($261.62 billion) this year, according to Wang Daoshu, deputy head of China’s State Taxation Administration.

Wang said tax and fee cuts “are part-and-parcel” of a proactive fiscal policy. Since the start of this year, China’s Ministry of Finance and the State Taxation Administration have announced the extension of existing tax and fee preferential policies, which are expected to reduce tax and fee payments for businesses by another 1.2 trillion yuan.

With the continued value added tax (VAT) credit refunds combined, this will relieve tax and fee burden by 1.8 trillion yuan for companies this year.