“The serious asymmetry in relations between China and the West has been brewing for two decades”

IIt took a pandemic to highlight, in chilling clarity, the very real risks and costs of outsourcing manufacturing to China. At the height of the Covid-19 crisis, the latter did not hesitate to take advantage of its dominant position in the manufacture of medical equipment to obtain a geopolitical advantage and to be exonerated from any responsibility. This grave asymmetry in relations between China and the West may have only recently become apparent, but it has been brewing for two decades.

Western policymakers have seen the launch of economic relations with China as a way to move it away from state planning and towards the principles of the market economy. The multinational corporate lobby has lobbied hard to break down trade barriers, viewing China’s huge population as a consumer market to enter and a labor market to exploit.

Read the column: Article reserved for our subscribers Investment agreement: “For the EU, the most serious danger is that the ‘good’ European model will be replaced by the ‘bad’ Chinese model”

This policy, however, was very misguided. China has joined the global economic system with attractive investment costs and an urbanized population of one billion people willing to work for wages averaging 1/30 of those in developed countries.

As a result, the country has carved out a dominant position as the top exporter – worth US$2.9 trillion in 2018 (about €2.785 billion); – and first manufacturer in the world – 25% of world production.

Job losses and wage stagnation

Unable to compete with China’s low labor costs and environmental standards, the West has suffered job losses and stagnant wages.

In addition, the tight control of capital and imports, by a still powerful Communist Party, had a disinflationary effect that made debt sustainability more difficult in the West. China’s growing economic firepower is the main driver of the decline of the European Union’s (EU) share of global manufacturing, and its impact is particularly marked in the case of France.

Read also Article reserved for our subscribers “The Commission’s project centered on the values ​​of a Europe that recovers its sovereignty can only collide with China”

Historically, France was among the first Western powers to establish economic partnerships with China, including cooperation in the field of nuclear energy. In 2019, however, it recorded a trade deficit of 33 billion euros with China – the largest recorded with any of its trading partners.

You have 45.2% of this article left to read. The following is for subscribers only.