The Hindu Business Line : Chirac's China mission to pave way for major deals

THE prospect of the French President, Mr Jaques Chirac, returning to Paris armed with some $3-billion worth of orders from China, has raised wider expectations for other Europeans to cash in on trade and investment opportunities in China.

Mr Chirac was accompanied by an "influential and powerful" French delegation of 52 corporate executives. The welcome and attention they received in China is rated as "extraordinary".

China's current two-way trade with the European Union could be nearing the $200-billion mark, compared to India's $30-billion mark. Germany is leading the way in the Sino-Euro trade with vast investments in auto manufacturing, hi-tech engineering and transport facilities. This year, France has staged an aggressive push to boost its share of China trade. Mr Chirac's "highly successful" visit to China, now paves the way for more manufacturing, technical and industrial collaborations for the French industry.

The biggest order has gone to multi-European plane manufacturer Airbus and the French train manufacturer Alstom. China has agreed to buy 26 planes from Airbus with an estimated value of $2.2 billion, while Alstom has won a train manufacturing contract worth $1.7 billion. According to another analyst, the final airplane deal could be 36 aircraft as major Chinese airlines have embarked on a programme to modernise.The Germans, who are competitors and rivals for the Chinese trade, are "keenly watching" the rising profile of Sino-French trade, according to German Chancellor Mr Gerhard Schroeder's office.

As for the European and French reservations about China's human rights record, according to European analysts "all that is now history" as letters of credit will overrule so-called "human rights and all that which goes with it".. All Europeans are keen to boost their trade and investment profile in China and there is much speculation about the EU countries lifting the "arms ban" on China to consolidate the fast emerging "strategic partnership" between the EU and China.

The US observers have accused the French and the Europeans of playing the "China card" as many observers are optimistic that China would soon place huge orders for hi-tech military equipment ranging from fighter planes to submarines. It is also possible that major European arms manufacturers may even enter into manufacturing collaboration with China to make the Chinese military base more sophisticated.

The Chinese Government has already initiated this process and the US and European embargo has so far been a major handicap. At this stage, this is an academic issue but it does not mean that arms ban on China can never be lifted.

Fearing China, Japan is also in the process of reviewing its defence tactics with latest news that Japan is thinking about developing pre-emptive strike capability amid growing awareness in European capitals that strategic scenario in Northeast Asia may undergo a profound change in the next two decades. So far, Japan has chosen to work within parameters of a "low and modest defence profile with no pre-emptive or retaliatory defence strike capability." The current European perception would indicate that this "cannot last indefinitely."

This week's "Chirac Mission to China" with $3-billion worth of orders for fast trains and civilian aircraft could pave way for major deals in "strategic" partnership with China.

France lags behind Germany and Britain in exports to China and Mr Chirac is in a "desperate hurry to catch up and even overtake them" within a decade.

ABN-Amro, one of Europe's largest banks based in Holland, is in the process of clinching a deal with China Galaxy Securities, the country's largest broker, to pave the way for the first foreign bank to enter its fast growing futures market. According to the media reports, both sides are "tight-lipped" about the scale and parameters of the proposed deal.