Lhe very offensive industrial policies in the United States and China do not only threaten Europe with industrial decline. They also exacerbate competition between European States, revealing increasingly marked divergences of interests, the consequences of which will directly affect national productive fabrics.
These antagonisms are not new. The 2000s were the scene of very strong intra-European imbalances, with record German external surpluses on the one hand, and French deficits on the other. These imbalances were fueled by different macroeconomic policies, with Germany compressing its demand while France pursued more expansionist policies.
If the latter are beneficial in the short term, they are difficult to maintain when our main trading partner does the opposite. Especially since the single currency removed the adjustment mechanisms that previously existed (devaluations), creating the illusion that the French economy operated as a closed economy. France was thus able to pursue expansionist policies without worrying about the external deficits which accumulated and seemed painless… while our deindustrialization accelerated.
A solution seemed necessary in the 2010s to get out of this impasse and relieve our exporters: a rebalancing of demand within the euro zone through a German recovery (sustainably) stronger than that of France. But that was without the priority given to industrial competitiveness at the heart of the German growth model for more than fifty years, through the compression of demand. To be lulled by the illusion of a recovery across the Rhine is to take the risk of maintaining the French vicious circle where external deficits and deindustrialization feed each other.
Non-cooperative play
Added to these macroeconomic divergences today are the repercussions of the economic war between China and the United States on the European continent. It exacerbates the differences in interests between European countries, and the temptation for each to pursue non-cooperative policies. The electric car sector has become the symbol of this. A common front would allow a coordinated response to Chinese vehicles boosted by subsidies at all levels of the production chain.
Instead, a non-cooperative game prevails, where European states engage in intense competition to attract investors and benefit from the job creation that comes with the establishment of industrial sites. The objective is to be able, thanks to these investments, to generate real productive ecosystems in these territories, and therefore to create value, innovation and even more jobs. China thus finds itself a doubly winner: not only do the divided European states neutralize each other on the response to Chinese subsidies, but Chinese manufacturers obtain subsidies to establish themselves on European soil, which further weakens our manufacturers.
You have 49.61% of this article left to read. The rest is reserved for subscribers.