China and France have a great deal of room to expand the scale of bilateral trade and investment, said officials and experts ahead of French President Jacques Chirac's visit to China.

Bilateral trade between France and China is "insufficient" compared with the sizes of the two economies, said Li Gang, an expert on China-Europe trade from the Chinese Academy of International Trade and Economic Cooperation.

"I think that though our two countries have developed a steady flow of exchanges, we could do better," Li said.

France is the fourth-largest trading partner of China among the European Union members. Bilateral trade hit a record US$13.39 billion in 2003, up 60.9 per cent over 2002. During the first seven months of 2004, trade between the two nations reached US$9.5 billion, up 39.6 per cent year-on-year.

Such a figure was still small, Li said. The market share of French companies in China is low compared to those from other countries.

"French companies have long suffered a lack of basic knowledge about China. As these companies have mainly been working in rather mature and familiar markets, they have often been reluctant to get into what they perceive as a remote and complicated market," he said.

French investment in China amounted to US$6.15 billion at the end of last year, making France the third largest source of direct investment in China among EU members, according to the Ministry of Commerce. It is, however, only 1 per cent of France's annual outward investment.

Pierre Barroux, president of the French Chamber of Commerce and Industry in China, is not particularly satisfied with bilateral trade volume between the two countries, which is only one-third that between China and Germany.

"We should make more effort to tap the potential," he said.

French companies are greatly interested in investing in Chinese companies and public sectors, and they have technical advantages, he said.

According to a report by Xinhua News Agency, Chirac on Monday strongly recommended French small and medium-sized businesses invest in China.

Chirac talked to leaders of 17 small and medium-sized French businesses, with whom he will visit China from October 8 to 12.

He said economic ties between France and China are worthy of being developed.

Chirac said he expected the number of French small and medium-sized businesses in China could reach 7,000 in 2007 from today's 3,700.

Currently, French products and services well-known to Chinese people range from Airbus planes, Citroen automobiles and L'Oreal cosmetics, to the Carrefour supermarket chain and the Daya Bay nuclear power station.

Sino-French economic ties are dominated by big contracts in areas such as energy and aeronautics, different from Germany and Italy, whose small and medium-sized businesses are much better presented in China, Li said. But small and medium-sized companies have important roles in the French domestic economy.

He said he is confident that in the near future France would be China's second largest trade partner in Europe after Germany as the French Government and more companies now view China as a priority.

"Economic partnership will further strengthen as China is opening wider and providing a more convenient environment for investment," he said.

An official from the Ministry of Commerce was quoted recently as saying that China hopes the French Government would encourage its businessmen to increase technological transfers to China.

Transfer of technology has been an important part of the cooperation between the two countries.

By the end of 2003, China had imported a total of 2,009 technological items from France, involving US$10.93 billion, making France China's second largest source of technology imports among members of the European Union.

France's world-leading products and technologies, such as nuclear energy, transportation, telecommunications, aviation, agriculture, petrochemical industry and environmental protection, are also priority areas for development set by the Chinese Government.

"China needs French technology while France needs the Chinese market. China and France are highly complementary in economic areas and have huge potential for cooperation," the official said.

(China Daily September 30, 2004)