As French President Emmanuel Macron embarks on a three-day state visit to China on April 5, investors around the world are looking for signs of improving business ties between China and the European Union (EU). The visit comes as geopolitical issues such as the ongoing war in Ukraine, the climate crisis, renewable energy, and travel are high on the agenda for both countries.
On the second day of the visit, Macron and European Commission President Von der Leyen hold a lengthy meeting with Chinese President Xi Jinping in Beijing before traveling to the southern city of Guangzhou to meet with Chinese investors. Top French business leaders have also been invited and expectations are high that international trade relations will be high on the agenda. The French delegation accompanies by a group of French business leaders, including the CEOs of companies such as TotalEnergies, EDF, and L'Oréal.
China is already the EU's second largest trading partner, and the EU is China's largest trading partner. The trade deficit between the two countries was €14.6 billion in January 2021, reaching a high of €36 billion in September 2022 before falling to €27.4 billion in December 2022.
Recent developments in China, such as the breakup of Chinese tech giant Alibaba, have rekindled global investor interest in the world's second-largest economy. This is seen as a sign of the end of a Beijing-led regulatory crackdown on sectors as diverse as technology, real estate, and education that has stifled foreign investment from China over the past few years.
Investor bullishness on China has been bolstered by Beijing's shift to pro-private enterprise, the reopening of the Chinese economy after years of COVID-19 restrictions, and the yuan's growing dominance in international finance. Russian President Vladimir Putin recently stated that his country prefers to use the Chinese yuan instead of the U.S. dollar for oil payments, and Saudi Arabia is reportedly in talks with China to use the Chinese currency for oil transactions.
All eyes will be on Xi and Macron over the next few days. A stronger relationship between China and the EU will increase trade and investment, creating new opportunities, access to new markets, and higher profitability and growth for businesses and investors in both regions. Experts believe that President Macron's visit to China will be an important opportunity to strengthen the relationship between China and the EU.
