Are China’s weaknesses a chance for the industrialization of the Mediterranean?
Published : Tuesday 11 August 2015 - by Jean-Louis Guigou
Article published in the Euromed blog of La Tribune (only available in French)
China’s increasing economic weaknesses, especially with the current drop in its exportations, make people fear a new major destabilisation of the world’s economy. However, these changes in China also represent an opportunity to re-industrialise Southern and Eastern Mediterranean Countries (SEMC), as well as France and Europe.
The Chinese government has taken two new orientations: at the national level, it aims at favouring higher incomes, consumption and the development of middle classes rather than exportation; at the international level, it aims at reinforcing regional integration via production and investment, with the creation of the Asian Infrastructure Investment Bank (AIIB).
China will give up 85 million of industrial jobs
China is no longer in favour of foreign DFI that will hold back Chinese incomes and consumption. Given the Chinese increase in revenues, the difference between China and developed countries is decreasing significantly. Even better, the World Bank is planning that in a few years’ time, China will give up 85 million industrial jobs to be relocated either in developed countries or in emerging countries.
SEMC feature many comparative advantages
Southern and Eastern Mediterranean Countries are incredibly lucky to benefit from these relocations. They feature many comparative advantages :
- they have a relatively cheap and high-quality skilled workforce;
- the cost of fossil and renewable energies is an indisputable advantage;
- Mediterranean countries lie on the maritime path of exchanges coming from Asia and going to the West. Amsterdam and Rotterdam can be places for industrial assembly and transformation;
- Southern Mediterranean countries are the closest neighbours of the great European Common Market of 500 million well-off consumers;
- SEMC can become industrialised following the coproduction model with European countries.
The example of Japan and Germany
Just like industrial Japan developed between 1960 and 2000, enabling East Asian Dragons and Tigers to benefit from its development;
just like Germany maintained its cutting-edge industrial activity, while bringing about Central and Eastern European countries in its coproduction system;
just like North America is re-industrialising, bringing about Mexico via its maquiladoras factories (creation of 2 million jobs in 8 years);
Southern and Easter Mediterranean countries could re-industrialise, in cooperation with European and Chinese economies, on top-of-the-range manufacturing sectors. Peugeot (PSA) is a great example: since the Chinese bought into Peugeot’s capital, the company has been heading South with one or two important factories in North Africa and moving farther towards the Middle East, Egypt and Sub-Saharan Africa.
Let us accelerate coproduction on top-of-the-range value chains to enable the three North African countries, in priority, to become emerging countries (going from 4% to 10% growth rate in the long term), by supporting the predictable evolution of the Chinese industrial policy. Algeria in particular has a great asset for, with its energy sources, it could drag other North African countries in its wake to become the European Ruhr.