Editorial May


With the stock market recovery we have been seeing since the beginning of the year, one country is out of sync with the rest: China.

And yet, that country suffered less from the pandemic, health-wise, than the rest of the world and, in fact, benefited considerably from the situation on the trade front, as seen by its trade surplus. Surprisingly, it is just this economic success that may explain the country’s relative under-performance. Other countries used a combination of monetary and fiscal policies to stimulate their financial markets. The billions they injected sharpened the decline in long-term interest rates and drove individuals to invest their surplus savings in the stock market, thus sustaining the rise in the equities markets that has lasted for over a year.

« The dichotomy between the highest stock market in history and a real economy struggling to dig itself out of a profoundly destabilising health and economic situation for the social, economic, and moral fabric of individuals is troubling. »

Lucile Loquès

But the unconventional monetary policy implemented by the central banks has disrupted the natural relationship between the economy and the stock market.

The situation is very different in China. Not only has there been no fiscal plan or changes to monetary policy, but the government seems determined to limit and control “stock market bubbles” or, in fact, anything that could weaken its power and control over the economy. Examples of this are legion:


  • They include the blocking of access to Bitcoin for the Chinese, slated to be replaced by a crypto-currency controlled by the Chinese Central Bank,  
  • Or the “crackdown” on the Alibaba group and its chairman, seen as a threat to both the public banking system and the official media, and therefore to the political regime,  
  • Or the increased control over the Provincial financial systems and the ever-more-precise “earmarking” of financial flows for industries identified as indispensable to China’s objective of gaining independence from the United States and taking first place internationally.

This controlled, systematic, and targeted approach has made China a force to be reckoned with and represents a major challenge for the Western world.

The past few weeks have brought to consciousness the “steamroller” effect of China. While we have gotten used to American reactions, we have also been seeing growing tensions between Australia and China. But the arrival of the new administration in the United States seems to have sped up the negative reactions to China, including within the European Union.

But to win in this confrontation, Europe must move forward united, give itself a cohesive, targeted, strategic industrial policy, and take a common position on the geopolitical stage.

Written by


Lucile Loquès
Director of the International Actions division

May 31, 2021

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