German investment in China is huge, but it could now be facing competition from France as Paris hopes to consolidate its business foothold in the vast Asian economy with a visit by President Jacques Chirac.
A welcome for Chirac near a Mao statue in Shanghai
Beijing appears to be keen on strengthening its relationship with the European Union and the Chinese authorities have even cited German and Scandinavian social and business practices as a sort of working model for the future of Chinese business.
The admiration is mutual: in the coming months, Germany is expected to step up its efforts to court Chinese business in preparation for Chancellor Gerhard Schröder’s planned visit to Beijing in December.
France in the forefront
But Germany isn't the only one getting in on the limelight. At the moment, it is France that that's wooing Chinese corporate giants. French and Chinese companies have already signed around 20 contracts worth over $4 billion (€3.2 billion) in the lead-up to French President Jacques Chirac’s arrival in Shanghai from Beijing on Monday. The biggest orders have gone to Airbus and the train-maker Alstrom.
According to the Associated Press, Chirac said his meetings with Chinese President Hu Jintao had "emphasized our determination to further strengthen French-Chinese relations. Our cooperative relationship will serve the world of the
The French-designed TGV-A high speed train
France is also lobbying for use of its TGV train on a high-speed line between Beijing and Shanghai, and Chirac said he hoped China would buy the trains "before much
Jin Canrong, Professor of International relations at Remin University of China, told DW-RADIO that Europe's role as important trading partner for his country continues to grow.
'The Year of Europe'
"The foreign ministry of China defined this year as 'The Year of Europe' in Chinese diplomacy. Early October last year, we issued the first policy statement on the region. So this now occupies a very important position in China’s global strategy, and to improve China’s international standing," he said.
Jin also said Beijing has used the EU as a model for its market and political policies.
"In the inner mind of the Chinese elite, the model of Europe always has a strong opinion, to (the) extent that China is rather market orientated economy ... But the political nature of China, I think the so-called cooperative market model represented by Germany and especially the Scandinavian countries, is more attractive to the Chinese elite."
France’s trade success in China has not gone unnoticed by other European nations. Economists predict Paris’ assertive diplomacy could intensify the race by EU states to gain a foothold in the world’s most promising markets.
German Chancellor Gerhard Schröder with Indian Prime Minister Manmohan Singh
The German strategy appears to be an attempt to strengthen its business ties to Asia not only within China, but elsewhere. On his recent diplomatic trip to Asia, German Chancellor Gerhard Schröder suggested that Germany may also want to beef up investment elsewhere on the continent -- for instance, in India.
France is behind Germany in terms of business investment in China, which imports more than three times more from Germany than from France.
How open is open?
But Paris has indicated that France has the potential to catch up with Germany over the next decade. For its part, there is a huge debate in China as to how far the communist country should open up its markets to Europe, professor Jin said.
"Economic nationalists say China is (already) open too far. China is a more open economy than our neighboring countries, such as the Republic of Korea, and Japan. The dominant opinion is that China should do more to continue to open its markets. The market situation is very complicated so the opening process should be taken gradually. We cannot afford a dramatic change," he noted.
But he said China has its own demands for the EU.
"First China wants market economy status. The second thing China wants is a lifting of the arms sales embargo. Third, China hopes the EU will take a stronger position against the separation movement in Taiwan."
Human rights concerns
Human rights groups fear that this increase in competition for business in China could lead to European countries turning a blind eye to Beijing’s poor human rights record.
But Jin said Beijing is mindful of what the EU thinks on the matter. He claimed the country is making some progress in improving its human rights record.