On a firm friendship trail

Given the above facts, China and France will focus on four areas of cooperation. First, they are likely to deepen cooperation in areas that have complementary effect. France enjoys traditional advantage in aerospace, nuclear energy and the auto industry, making it "an indispensable trade partner" of China, which should continue to use France's technological advantages.

Airbus SAS has developed rapidly after entering the Chinese market, with its narrow-body jets accounting for nearly half and wide-body jets up to 60 percent of China's civil aviation market. Two of the four European Pressurized Reactor power plants being constructed by France are in China, which has also become the largest market for major French automakers.

Second, the two countries are expected to chart a number of new growth paths. Both want to consolidate and create new fields of cooperation and, hence, may expedite the establishment of "special, high-quality partnership" in some fields such as food exports, because China has become the third-largest overseas market for French wine. French cheese, too, has the potential of establishing a large market in China.

Total S.A. and other French enterprises have already started discussing the prospects of shale gas development with China. Joint efforts to develop the sector will not only help upgrade the technology, but also give more French energy companies the opportunity to enter the Chinese market. In addition, France's experience in advanced ecological agriculture can provide China with the technology, methods and other valuable experience to ensure its sustainable development.

Third, Beijing and Paris may encourage Chinese enterprises to invest in France, which should not be difficult considering that Europe remains the first choice for China's overseas investors. Chinese enterprises respect local customs, abide by environmental protection rules and strictly fulfill their social responsibilities. They have also made valuable contributions to the development of Sino-French economic and trade ties.

So it is likely that the two countries will consider introducing a series of preferential measures to streamline the visa granting procedure and other processes, including tax reduction for Chinese investors in France.

Fourth, China and France are also expected to promote monetary cooperation. The international economic landscape has changed significantly after the global financial crisis. Major currencies, especially the euro, have suffered severe blows, while the yuan has remained stable and is likely to become an international currency in the near future.

If Paris becomes an offshore settlement center for the yuan, it will strengthen France's economic position in Europe and help reduce the impact of other countries' quantitative easings on it.

Compared with London, Paris has some added advantages as an offshore yuan settlement center. For example, the United Kingdom pays more attention to financial products, whereas France focuses more on the role of the offshore yuan market to provide more finance for the real economy, especially small and medium-sized enterprises.

Besides, France is part of the eurozone and yuan deposits in the Paris market have crossed the 10-billion-yuan ($1.62 billion) mark, making it Continental Europe's largest center for yuan funds. France's special relationship with African countries, too, is conducive to the internationalization of the yuan.

The world will be waiting to see how the results of the intensified economic exchanges and stronger political relations between China and France help chart a new path of economic and mutually beneficial development.

The author is a researcher with the Institute of European Studies, affiliated to the China Institutes of Cotemporary International Relations.

(China Daily 04/27/2013 page5)