May and Macron come home with different prizes from China

HONGKONG - While the communiqués coming out of State visits to China by France’s President, Emmanuel Macron, and the UK Prime Minister, Theresa May, look similar, the reality is that the two leaders have left China with quite different sets of agreement.

In a briefing paper, the French banking group, Natixis, says that for the UK, the recognition of its new status – clearly out of the European Union and most likely a hard Brexit scenario – has pushed May towards an intermediary role.

“The UK Government has been trying in previous occasions to switch towards a more bilateral relationship with China, and two major issues stands out this time,” the paper says.

“First, the UK will become the first large advanced economy to support the Belt and Road Initiative(BRI), if not directly. London is also identified as a key participant for financing.

“British and Chinese banks are invited to collaborate in financing the BRI, and the UK Government has agreed to contribute to a new Asian Infrastructure Investment Bank (AIIB) fund for the same purpose.

“Second, Theresa May has clearly pushed for London to connect to China’s capital market. The most imminent action will be a London-Shanghai Stock Connect. A bond connect is also mentioned, but is clearly less immediate.”

As for Macron, Natixis says, “his main goal is to appear as a key European leader to discuss with China on the issues beyond their bilateral relation. At the same time, though, Macron has clearly pushed forward France’s business agenda with China.

“The two most obvious cases are the following.

“Paris intends to become the largest offshore RMB settlement centre in the Eurozone (Paris is already the second-largest centre in Europe after London so this goal is obviously achievable).

“In addition, France is to establish a more prominent role in the field of aerospace and aircraft industries, as well as nuclear power, according to the France-China communiqué.

“In sum, May has jumped into the Belt and Road Initiative while Macron secures EU leadership without forgetting key national sectors.

“Key European countries’ increasing zeal to curtsy China comes with a prize - but not everybody gets the same one. www.natixis.com (ATI).