France knows the place, China has the money, and now a major joint investment fund for Africa is in the works between Paris and Beijing to help drive the continent's economic expansion.
BEIJING — Britain, France and Germany have recently been extending olive branches to China, but France has at least one major advantage over its neighbors: It's particularly well poised to cooperate with China on investment in Africa, with historical advantages to serve as a springboard for the Asian power's ambitions on the continent.
"France has long experience in Africa," says Muriel Pénicaud, president of the French Agency for International Investments. "A growing number of Chinese enterprises produce goods in France to export to Africa."
According to French foreign investment and job creation data, nearly 200 Chinese companies had operations in France as of last year, making it the country's eighth-largest investor. Since 2010, China's investment in France has steadily grown, at a rate of 6% between 2012 and 2013.
China's second-largest carmaker, Dongfeng Motors, invested 800 million euros in February to gain a stake in the French company PSA Peugeot Citroen.
Pénicaud, meanwhile, noticed on a trip to China that Chinese companies lack a basic understanding of Africa. As a past colonizer of many African countries, France has had a presence on the African continent for nearly 150 years compared with China's mere 20. And China is often scolded by the West for some of the ways it does business there, without sufficient attention to local factors.
For now, French enterprises are concentrated primarily in West and North Africa. But they have also started to target other areas. As data from the African Development Bank forecasts, Africa's GDP will continue to grow, and by 2060, the continent is expected to see a majority middle-class population, and extreme poverty that is still all too present is forecast to be virtually eliminated.
Under the most optimistic picture, total African GDP could exceed $1.5 trillion by 2060. This means that the continent will need major infrastructure, communication and telecommunication investment.
Just as French companies try to cooperate with Chinese or Japanese companies when entering the Asian market, France is available to collaborate with China for its foray into Africa, a source from the French Foreign Ministry says.
"The offshore RMB (Chinese currency) market in Paris is aimed at Chinese companies' business in Africa because the continent's finance market is underdeveloped," the source says. "Paris offers services that Africa doesn't yet have." France may be the European country where RMB is most used, and French companies are also more willing to use the currency to trade.
[rebelmouse-image 27088371 alt="""" original_size="640x427" expand=1]
Long French History: A Peugeot 304 in Tanzania in 1978. Photo: Mwanasimba
In September, the People's Bank of China authorized its Paris branch as a certified clearing bank for the Chinese currency. As Bank of China data indicates, its Paris branch handled over 1.3 trillion RMB ($212 billion) in cross-border transactions last year.
Private and public interest
The French government has also taken some direct initiative in pushing cooperation with China in Africa. A well-placed French government source says the two countries' sovereignty funds began exploring related issues three months ago and will probably set up a common fund for African investment. The same source says that, just as President Charles de Gaulle established diplomatic relations with China 50 years ago, joint France-China investment in Africa will also be a long-term strategy.
There is also a sense in Africa that France can help make up for the shortcomings of Chinese companies there, the source says.
China and France celebrate 50 years of diplomatic cooperation this year. The warm bilateral relations will undoubtedly support their joint foray into Africa. French President François Hollande visited China last year, which was followed by a visit to France this year by Chinese President Xi Jinping.
In the past two and a half years, French Foreign Minister Laurent Fabius has visited China eight times, a record for any French foreign minister. The cordial relations are an important reason why China would rather invest jointly with France than with any other Western country that has previously colonized Africa.