Macron flatters Xi Jinping as France becomes addicted to Chinese money

Emmanuel Macron’s trip to China earlier this month was hardly a diplomatic victory. Chinese troops openly threatened Taiwan during his stay, but the French president was careful on the issue, saying Europe should not choose sides in the growing geopolitical conflict between the United States and China; it should focus on its own strategic interests; and hopefully Become the third big country tied with its two rivals.

Macron draws criticism amid three days of flattery from increasingly authoritarian Chinese President Xi Coming of age in a country that cracks down on dissent And explicitly backing Vladimir Putin in the Ukraine war.

Of course, in a way, he’s just a typical vanished French president.from Charles de Gaulle They are trying to get rid of American influence, despite the EU’s diminishing role in the global economy, making its claims to “superpower” status increasingly comical. However, the bigger problem is this. To an extraordinary degree, France is now completely dependent on China for its livelihood.

Just look at some numbers. Luxury goods group LVMH has seen buoyant sales of late, with overall revenue up 17%, according to analyst estimates.Asia does not include Japan, now basically refers to China It accounts for a third of its revenue and has overtaken the US as its largest market.

Macron has drawn a lot of criticism for being soft on a country that cracks down on dissent

Sales at rival Hermès rose 23%, again handily beating market expectations, boosted by sales of its popular Birkin bags in the US and China.L’Oréal has underperformed, with sales in China falling slightly in the latest quarter, but Domestic sales were still up 5.5% in its latest results.

The trio of fashion and beauty giants now dominate the French stock market and economy It’s gotten to the point where few people think about it. Bernard Arnault’s fashion giant dominates the CAC-40 in Paris, making Apple look like a minnow in New York. It is now worth $446 billion, which is only about 20% of the total value of the CAC-40 ($2.35 trillion, in case you were wondering).

If you add 226 billion L’Oreal and 207 billion Hermes, the three giants of French fashion and luxury goods It accounts for almost 40% of the total CAC-40. Over the past two decades, France has essentially become a fashion house connected to the country. No other major economy in the world relies so heavily on so few companies, all concentrated in the same industry.

Pretending to be a politician, he increasingly became a salesman for the French fashion industry

For all the money invested in its airlines, aircraft manufacturing, car companies and defense and power groups, France has nowhere else to actually make money or attract investor interest. The luxury economy keeps countries and stock markets afloat, e The main and most profitable market for all these high end handbags and fragrances is now China.

Of course, there’s nothing wrong with that in itself. Every country has industries it excels in, whether it’s engineering in Germany or financial and professional services in the UK, you’ll need to figure out how to sell them all over the world to make a living.

French fashion houses, especially sophisticated ones Arnault overtakes Elon Musk as world’s richest man, has done a fantastic job by leveraging the country’s rich heritage in design objects, making strategic acquisitions in Italy, Germany and elsewhere, and transforming what was once a niche product into an ambitious global megabrand. It’s a clever trick if you can pull it off.

However, there are two big problems. The first is that there is no market more fickle than fashion, e The French economy is now particularly vulnerable to changing tastes. If another type of stock sweeps China, the CAC-40 will collapse, quite literally. The second and more important problem is that the economy is completely dependent on access to the Chinese market, which is given on a whim by the Beijing government.

We already know that Germany depends on the Chinese market, and this country also depends on Chinese exports and protection of its huge investment in the auto industry. But at least Germany has a diverse clientele and a large number of companies. France is entirely dependent on a handful of premium brands.

It is not hard to see why Macron is so keen to appease China.. The French president speaks highly of strategic autonomy, European sovereignty and the search for a third way between the two great powers of the 21st century. But behind all this lofty rhetoric lies a dirty secret. The French economy is now even more connected to the Chinese market than the German economy.

You need the country to keep growing and open to expensive imports, funding one of the world’s largest governments and one of the world’s most generous social security and pension systems. Macron pretends to be a politician. Increasingly, however, he is merely a salesman for the French fashion industry and an unreliable ally of the US, UK and others.