INTERNATIONAL TRADE: China Is the enemy of Europe's economy?
May 15th, 2012
During his election campaign, Francois Hollande has not made any secret of the fact that he wanted to rebalance trade relations between Europe and China, responsible, according to him, the crisis Europé ; enemies. "I arrived at a time when I think we should name the opponent. I had done for finance. It will do so for the Chinese. The problem, it is Chinese. They cheat on everything: on the currency, in research, "he said bluntly to reporter Eric Dupin in his book published on May 10 entitled" Poison Victory "( Seuil).
The new head of state he is right to designate China as responsible for the debt crisis in Europe? How can he act to balance the trade and balance monetary with Beijing? Here is the opinion of two experts in the field, Danielle Schweisguth, an economist at the French Observatory of Economic Conditions (OFCE), and Antoine Brunet, president of the company analysis AB Markets and co-author of "The hegemonic China, economic imperialism" (ed. L'Harmattan, 2011).
FRANCE 24: How can China be regarded as responsible for the crisis in Europe?
Danielle Schweisguth: At the beginning of the Greek crisis, the Chinese have proposed to invest, via their sovereign wealth fund, debt securities in Europe. They finally turned around to face the magnitude of the crisis and have very little invested. Their statements on the markets, explaining why they were concerned and would not help specific countries such as Greece and Spain, have actually worsened the crisis. But it is legitimate for a developing country is reluctant to help industrialized countries.
Antoine Brunet: I'm up to this responsibility further: China is behind the last two waves of crisis in the West, that of 2008-2009 and the one that concerns us right now in Europe.
Between 2002 and 2007, the trade deficit the United States, mainly dug by China, reached 6% of GDP, which is very depressed for the activity. To keep their economies growing, Americans artificially stimulated their economies by the real estate sphere, generating a bubble that has resulted in the 2008 financial crisis.
For the current crisis of debt, it's the same dynamic. For too long the countries of Southeast Europe have tried to offset the depressive impact of their own trade deficit - had Here again, China - by repeated government deficits. However, the debt of these countries now approaching or exceeds the threshold of 100% of GDP *, making growth inaccessible.
Now China plans to replenish the Fund support the European Financial Stability (EFSF). Francois Hollande is he right to move in?
D. S. : China follows a logic: she did not want to bail out troubled states, including Greece, because it lacked the necessary guarantees. Such guarantees, it was obtained, however, investing in a European fund as the EFSF. In return, Beijing will certainly ask that the Europeans stop putting pressure on exchange rate policy.
This problem of monetary policy is not new. The Chinese currency is undervalued and its course is not rebalanced by the natural balance of payments. But China is in line with the relaxation in this area. Already, the fluctuation band was revalued daily at 1%, against 0.5% previously. This will be done gradually: China does not want to risk losing market share too quickly.
A. B. : I think China has strategic intentions vis-à-vis Europe, which it intends to exit the vassals and American fold.
China is both arsonist and fireman. It has catalyzed the fire to destroy confidence in the euro area by distilling soundbites that have amplified fears about the solvency of Greece. Then, it offers its services to Europe, saying: "We are the only ones who can bring you the financing you are seeking."
Also this game of hypocrisy, there is worse: by offering to buy European bonds, China poses two requirements. On the one hand, States resolve its budget deficit and maintain a policy of austerity and social damage, which will put those countries in greatest difficulty and still feed their de ; independence in relation to it. Moreover, Beijing requires that the euro remains stable against the dollar and the yuan. But the euro is currently the most expensive currency in the world (it is 84% overvalued against the yuan).
What can concretely Francois Hollande?
D. S. : You can not get angry with the Chinese, because the trade retaliation would be immediate. If you make a policy statement on human rights in China, a French company loses market. Political and industry are intertwined. However, the Chinese domestic market is essential.
On the other hand, the trade surplus is being reduced by itself due to the global crisis. China exports less, they even recorded trade deficits in February. Finally, it is vain to say that the undervaluation of the yuan is unfair: the Chinese argue that this is a matter of domestic policy. It is a dialogue of the deaf.
A. B. : France will meet with the reluctance of Germany: not so much by the political power in Berlin that German multinationals, who started playing the game back from China. Groups such as BMW and Volkswagen can continue to increase their market share in China, provided to ensure that Chancellor Angela Merkel refuses devaluation, yet indispensable to the euro … ……
Germany is torn between its industrial strategy vis-à-vis China and the survival of Europe, to which she has interest. It will put in front of Berlin's responsibilities: successes in Asia have a worthy counterpart unsustainable for other European countries. I wish every success Francois Hollande to broach the subject with Angela Merkel!
* Ratio of debt to GDP (Eurostat, 2011): Greece (142.8%), Italy (119.0%), Belgium (96.8%), Ireland (96.2%), Portugal (93.0%), Germany (83.2%), France (81.7%), Hungary (80.2%), the United Kingdom (80 %), Austria (72.3%), Malta (68%), the Netherlands (62.7%), Cyprus (60.8%) and Spain (60.1%).

