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A competitive analysis of China (2005)

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Having 1.3 billion people, China is the most populous country in the world. Led by a communist regime since 1949, it has gradually opened to the outside world by the "long march" towards the free economy, launched in 1978 by Deng Xiaoping. Growth accentuates regional and social inequalities between the richest 300 million people and the remaining billion people accelerate the rural exodus and inflation.

There is an overheating of the economy, resulting in extreme poverty, a banking sector damaged by bad loans; many problems of counterfeits with strict penalties; the establishment of coordination between INPI; fraud prevention; foreign trade and China's customs. Trade openness is more important than ever and it leads to rise in unemployment quite fast, economic rules are random, social protection is nonexistent and corruption is rampant. The judicial system is also unreliable.

Three years after its entry into the WTO, China has successively made several promises, including lower tariffs; elimination of technical barriers and the opening of the market in services; but it still has a lot to accomplish, especially in the area of Intellectual Property. The country which is known for its second largest economy is experiencing an annual growth of nearly 10% since the early 80's.

It attracts more foreign investors who find a huge potential market and it is hence a complex country with its language, bureaucracy, and its legal framework in permanent evolution. The Chinese buy French companies, they account for 12% of the global energy supply, driving up commodity prices and begin to give voice to the international diplomatic issues. They benefit more nuclear power plants that the Europeans themselves have built. Textiles are known for its huge rise in the exports following the lifting of quotas.

The internal market comprises more than one billion people, demand is huge, and the products are inexpensive and are of very good quality. Purchasing power in China is equivalent to that of Europe today, the consumer society continues to Westernize and labor flexibility is important. With six billion invested, France is lagging behind. It carries 1.4% of China's foreign trade against 5% in the rest of the world. Today, France and China are economically the same.

The "success stories" (EDF, Areva, Carrefour) are very numerous, and hundreds of French companies are operating in China. Globalization of China has a double meaning: the growth of China serves a number of French companies, and for Europe, some problems remain to be addressed as the issue of off shoring and the unfavorable exchange rate of euro.

Nuclear Development: The development of China is now a growth model. However, this growth could be jeopardized by a shortage of energy, thus blocking any activity and dramatically arresting the "Chinese miracle". The Chinese, has got as far as risk, are engaged in the design of nuclear power plants and can meet the growing needs of the country.

Tags: Nuclear Development, globalization, China's foreign trade, commodity prices, French companies, labor flexibility, legal framework, communist regime, Deng Xiaoping, judicial system

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