French fear being indebted to China

In front of the horse-meat butcher shop she runs with her husband on Rue de la Roquette, Marie-Francoise Peltier reminisced about how things used to be in this enclave of Paris’ 11th arrondissement, back when the street was lined with neighborhood boulangeries, cafes and boutiques.

“It was like a little village here,” she said.

In the late 1980s, several struggling textile shops around long, narrow Rue Popincourt were acquired by Chinese importers. They prospered, attracting others who bought out more of the surrounding small businesses that were unable to make ends meet.

Within a decade, as closing time came around, the metal shutters of the wholesale clothing shops would roll down and Rue Popincourt would go dark: a mini-industrial zone in the heart of Paris.

On its small scale, this neighborhood has experienced some of the anxiety now being felt as the European Union looks to emerging nations, and especially to China, to invest in its teetering finances to calm panic over the bloc’s massive debt crisis.

Any Chinese bailout for Europe is unlikely to re-create Rue Popincourt’s experience across France. The Chinese money would be used to beef up a European-wide line of credit aimed at insulating beleaguered economies such as Greece and Italy from their high-debt troubles. And so far, the Chinese have shown no enthusiasm for putting their money into Europe’s troubled hands.

But that has not stopped many here in France, on the right and the left, from worrying that they would surrender some of their sovereignty should China change its mind about tapping its stash of foreign reserves to contribute to a bailout.

“We’re going to put ourselves in the wolf’s mouth, once we’ve taken this money that I call dirty money,” right-wing lawmaker Nicolas Dupont-Aignan said recently, adding that any deal would be like “prostituting” Europe.

The Green Party’s leader, Eva Joly, fears “selling Europe in chunks to China.”

More moderate critics of any EU-China deal come from the ranks of mostly left-leaning political figures, including Socialist presidential candidate Francois Hollande. They argue that any increase in financial dependency on China would diminish French and other European influence over the emerging superpower, limiting leverage on issues such as human rights and international trade.

Of course there are others, including members of the French government, who profess that there is no downside to fishing for Chinese aid.

If Beijing “decides to invest in the euro instead of the dollar, why refuse?” said French President Nicolas Sarkozy, who led Europe’s cap-in-hand appeal to Chinese authorities. “Our independence wouldn’t be threatened in any way,” he said.

“Withdrawing into oneself is absurd,” right-leaning former Prime Minister Jean-Pierre Raffarin said in a recent interview with the French weekly JJD. “The European and American economic motors are out of order. China has stepped in.”

But behind much of the anxiety is “a lot of mystery” about China, coming “not just from the French, but from Western imaginations,” said Jean-Philippe Beja, a senior researcher on China at the Center for International Studies and Research at Paris’ Sciences Po university.

“We see this great power, and wonder in what direction it will go … and there’s a sense of the circumstances being flipped, with what people see as an underdeveloped country coming to save us,” he said.

Despite it being “totally false,” Beja said, “today we have this image of a triumphant China that is conquering everything.”

Although China is expected to ask for improved market access in exchange for investment, and possibly a relaxation of an EU arms embargo, Europeans probably will not notice a major difference in their way of life after a deal. Europe already accounts for about 20% of Chinese exports.

Nevertheless, “we are going from a China that is still largely in development, to a China that has a stronger hand in the market. And that’s a big change on the international scene,” Beja said.

Sacha Lin, who helped mediate tensions between residents and Chinese merchants on Rue Popincourt through his Assn. of Young French Chinese, said that “vilifying” public arguments on a Chinese bailout “spread unfounded prejudice.”

“Of course it bothers us,” he said of the group, which was created “because we felt that there was a problem with the image of the Chinese community, from those who were unfamiliar with it.”

“This is not some kind of aggressive buyout,” he said. “China isn’t forcing Europe to take its help. Europe is the one asking China for help.”

Both the national debate and the tension that roiled the Popincourt neighborhood, he said, “have that in common: We are the extraterrestrials.”

But down the street from Peltier’s butcher shop, a woman who runs a traditional cheese and wine shop said that Chinese merchants had saved what was a depressed neighborhood, “with no center, and no demand.”

“I prefer this to what we had before, with French businesses going bankrupt,” said the woman, echoing the views of others in the area who support the presence of the Chinese wholesalers.

Perhaps tellingly, however, she would not provide her name, concerned that other residents would react negatively to her comments.

Lauter is a special correspondent.