China’s Industry Threatens Entire Global Economy, France Warns

William Horobin and Oliver Crook, Bloomberg News

Bruno Le Maire, France's finance minister, speaks during an inauguration of a facility expansion at the Innovafeed SAS insect farm in Nesle, France, on Friday, April 21, 2023. Agricultural trading giants Cargill Inc. and Archer-Daniels-Midland Co. have invested in French firm Innovafeed, signaling that both companies are furthering their commitments to the use of insect protein in pet food and beyond. Photographer: Benjamin Girette/Bloomberg , Bloomberg

(Bloomberg) -- The entire world economy is at risk from a glut of cheap Chinese exports, France’s Finance Minister Bruno Le Maire said in tandem with a barrage of joint criticism from the Group of Seven.

“We have an issue with the economic model in which China is producing more and more cheaper industrial devices because it could be a threat not only for the EU, not only for the US, but for the global world economy,” Le Maire said in an interview with Bloomberg Television. “We need to address that issue.”

Leading industrialized nations are coalescing for a tougher and more united challenge to overcapacities in China, which they say threaten their domestic manufacturers.

G-7 finance chiefs meeting in Stresa, Italy cited the country by name as they agreed to “respond to harmful practices” and “to consider taking steps to ensure a level playing field.” Those words marked an escalation from the sparse and more neutral language on trade they standardly use in communiques.

Their statement followed Washington’s announcement on Friday that President Joe Biden will reimpose tariffs on hundreds of goods imported from China. Meanwhile the EU is nearing the end of an electric-vehicle subsidy investigation that is likely to lead to defensive measures against China’s auto exports.

The EU’s potential levies are expected to be significantly lower than the US’s and based on a different approach within World Trade Organization rules and procedures.

Le Maire said at the G-7 meeting that member countries need to strengthen information exchange and establish a shared assessment of China’s industrial practices. Nonetheless, he insisted that the EU has all the necessary tools to reestablish a level playing field .

“Don’t make any mistake about the determination of the EU countries and the French determination,” Le Maire said.

AI Cooperation

The French minister said he is seeking to preserve gains from years of government policies and investment to build its own industry and technology sectors.

A key priority is Artificial Intelligence, where France intends to preserve its leadership in Europe. That has attracted foreign capital, with Microsoft Corp. announcing €4 billion in investment in French cloud and AI infrastructure this month. Paris-based Mistral AI has also announced a partnership with Microsoft in February.

Asked if he could used state screening rules to prevent foreign investors taking over French tech companies, Le Maire said the point at the moment is to increase cooperation, not to block it.

“We will see what are the options of cooperation between Mistral and Microsoft,” Le Maire said. “For the time being, Microsoft is investing in France, is opening data centers in France and investments of Microsoft in France are most welcome.”

--With assistance from Caroline Connan, Viktoria Dendrinou, Toru Fujioka, Kamil Kowalcze, Alessandra Migliaccio, Tom Rees and Jorge Valero.