A group of French and German economists has urged Europe to identify which industries to support in the face of Chinese competition and boldly abandon those where the battle had already been lost, such as the solar power sector. The recommendations were presented in five memos to the Franco-German Council of Ministers at the request of the two governments during a council meeting. The memos cover trade with China, as well as defense, energy, economic growth and the labor market.
The economists advised Europe to protect sensitive sectors such as defense, space and robotics, while leaving mature industries open to cheap Chinese imports. They welcomed Chinese investment in critical technologies such as batteries, provided that technology is shared, according to a summary published by the Franco-German Council of Economic Experts. Jean Pisani-Ferry, French Economist and co-author of the memos, pointed to solar panels as a clear example of an industry Europe should concede. “Chinese industry is far ahead of everyone else and there’s no longer a solar panel industry in Europe,” he told French TV channel BFMTV Business. “Ultimately, it’s not such a big deal because solar panels stay in place once installed. They do not create a dependence, unlike gas, which you need every day. Hence, it’s a technology in which we have to admit that we’ve lost the battle.”
For sectors where the EU seeks to compete, Pisani-Ferry urged the bloc to adopt a strict technology-for-market approach, encouraging Chinese investment alongside sharing with European partners. Despite long-standing calls in Europe to tie market access and subsidy restrictions for Chinese battery companies to technology transfers, no such measures have been introduced. France, for instance, offers tax credits of up to €200 million to companies investing in the country, with no obligation to share technological know-how – part of its ambitious vision to become Europe’s battery hub.
In June, French President Emmanuel Macron visited the Chinese company Envision’s battery factory in northern France, hailing it as a prime example of his push to re-industrialize the rust belt region. Paris and Berlin have promised to “strengthen the competitiveness of the European battery industry” and work towards a bloc-wide preference scheme “in core and critical strategic areas of industrial production, including public procurement”, according to the economic agenda published after the council meeting, the South China Morning Post reports.
