France remains dependent on China in strategic sectors

The Covid crisis had underlined the importance of Chinese imports from France in key sectors. Political declarations wishing to attenuate this link then multiplied, without it being possible for the moment to observe any concrete effects.

“We must reduce our dependence on a certain number of great powers. In particular on China for the supply of certain products.” This was what the Minister of the Economy, Bruno Le Maire, declared in March 2020, a few weeks after the start of the Covid-19 epidemic in France. The health crisis had thus highlighted the importance of Chinese imports in French supplies.

Since then, political declarations calling for reducing France’s dependence on China have multiplied. Emmanuel Macron, who welcomed Chinese President Xi Jinping on Monday May 6, again recalled, last week, the importance of defending “strategic interests“of France and the need to engage “economic relations that are based on reciprocity” with China, in an interview with the British magazine The Economist.

An unbalanced but stable trade balance

Because since the 2010s, the trade balance with China has largely stabilized in favor of the latter. Although imports and exports are increasing, the ratio between the two remains constant. In 2023, France will have imported approximately 71 billion euros of Chinese goods and services, the vast majority of which are manufactured products, a figure down slightly compared to 2022.

“This trade balance deficit vis-à-vis China is partly offset by the fact that we are in surplus on the balance of services, in particular tourism, which has still been very penalized by Covid., explains economist Isabelle Méjean. A situation of dependence which has changed little despite political declarations in favor of a rebalancing.

But for specialists, this dependence must be put into perspective. “If China’s share of imports is not negligible, it is not the majority either, because the majority of our imports come from Europe“, underlines Isabelle Méjean. In 2019, according to INSEE, China only represented 9.3% of total French imports.

In addition, France remains closely linked to China in less essential sectors, such as textiles. “Finally, strategic products mainly manufactured by China are only a small part of the products where there is dependence“, explains Vincent Vicard, economist at the Center for Prospective Studies and International Information.

Some sectors still subject to supply risks

Among the strategic products, we find medicines and pharmaceutical products in the broad sense, but also electric batteries, electronics, smartphones and even computers. The European Commission therefore regularly updates a list of strategic dependencies. “On some of these types of goods, China practically has a monopoly”notes Isabelle Méjean.

But if the health crisis has highlighted the problems posed in certain sectors, this situation has existed for longer. “This is seen a lot in sectors where there are big economies of scale, such as chemicals. It is much more profitable and much less polluting to produce very large volumes. Therefore, the global supply is very concentrated”, explains the trade specialist.

But the list of strategic products is constantly evolving, recalls Vincent Vicard. “For example, China has emerged as a producer and exporter of electric vehicles over the last five years. This country, which was a commercial dwarf in the automobile sector, has become the main global exporter by exporting 5 million vehicles in 2023.“ The import of certain Chinese goods such as computers or electric batteries is also progressing.

Relocations and multiplication of commercial partners

Gold, “in the context of the war between Ukraine and Russia, but also the change in US doctrine, the risk is increasing that commercial links will be used to impose geopolitical views“, warns Vincent Vicard.

First step to reduce this dependence: diagnose possible vulnerabilities. “And this is not necessarily obvious“, underlines Isabelle Méjean. The economist thus cites the pharmaceutical sector. “We know that there are more and more supply disruptions. But are they really due to this international supply? Or are they linked to the strategies of pharmaceutical companies, which are abandoning a certain number of drugs, or concentration of production?”

Faced with this situation, Europe (PDF link) promotes the “de-risking” (“risk mitigation“), by multiplying trade partners. The Council of the European Union, for example, adopted in December 2023 a trade agreement with Chile, a major supplier of rare metals. “But these remain first and foremost commitments, with few concrete measures behind them.“, tempers Vincent Vicard.

“What policies will be put in place, in which sector? For the moment, it is not clear.”

Vincent Vicard, economist

at franceinfo

To try to limit its dependence, France, for its part, has undertaken a policy of relocating certain industries. This is the case in the electric battery sector, with the opening of a first battery production factory in Pas-de-Calais.

But for the moment, it is difficult to say when these initiatives will have concrete effects. “These are long processes. And if, in certain sectors, we see developments, in others, such as photovoltaics, it is difficult to see a reduction in dependencies taking shape.“, concludes Vincent Vicard.