by Mathieu Rosemain and Leigh Thomas

AIX-EN-PROVENCE, FRANCE (Reuters) – European companies fear they will be caught in the crossfire of the growing economic rivalry between the United States and China, leaders present at the Aix-en-Provence Economic Meetings Provence (Bouches-du-Rhône) being frustrated by the slowness of Europe to develop a response to this situation.

Growing trade tensions between the two superpowers add to other challenges for politicians and business leaders, faced with a near-shutdown European economy and the uncertainties of having to adapt to either a hard landing, either hard or soft.

“We are particularly vigilant about the current tensions between the United States and China,” said Florent Menegaux, president of French tire manufacturer Michelin.

“Geopolitics of course has an influence on the way companies work,” he added, indicating that Michelin was in the process of reviewing the supply of certain components in order to avoid too much dependence on the China.

Seeking alternative sources of raw materials or overhauling supply chains to reduce exposure to China – called “derisking” in the West – has been fueled by Beijing’s recent restrictions on exports of two raw materials keys, gallium and germanium, used in the manufacture of semiconductors.

“We are paying for the competition between China and the United States,” said Jean-Dominique Senard, the president of Renault, in reference to Chinese restrictions, while Europe is in the grip of what he calls a “storm Chinese” which threatens the electric vehicle industry.

China’s show of strength in supplying key metals comes after years of strategic investments and should come as no surprise, said Christel Bories, chief executive of mining group Eramet.

THE IRA GENERATES FRUSTRATION

“They’ve built monopolies and they’re using them,” she said.

“On the battery value chain, it’s not just about controlling the chain, but also controlling the costs,” said Christel Bories, adding that China was building another monopoly on battery supply. nickel and cobalt – which are also key components of batteries – in Indonesia.

European leaders are also increasingly frustrated by the consequences they believe the US Inflation Reduction Act (IRA) could have for some large industrial groups, whose energy bills are still much higher. than in the United States.

“When you see the impact the IRA will have (on European businesses), I think we haven’t talked about it enough at this conference,” said a senior banker. “The risk is great that European companies will move their investments (from Europe to the United States).”

Some believe that the main concern is the time taken by the authorities of the European Union to react.

“With the IRA, there is some stability about what businesses should expect in the United States,” Veronika Grimm, one of the German government’s top economics experts who advises the Chancellery, told Reuters.

“Meanwhile, in Europe, we are debating whether we should have subsidies and whether we should tax superprofits.”

Heather Boushey, a member of the White House Council of Economic Advisers, who was attending the conference, defended the IRA, saying the United States would remain loyal to its trading partners even as it reconsidered its role in the global trading system. .

“I understand the frustration, but if you look in detail at what extent the United States subsidizes its domestic industry, it’s no more important than what the Europeans themselves are doing,” she said. .

The few Chinese executives present at the conference, meanwhile, pointed out that Europe had become a battleground not only for Chinese dominance, but also for US dominance in technology.

“The risks are not just coming from the East,” said a senior executive from a Chinese group on the sidelines of the conference. “They can also come from the West.”

( Benjamin Mallet)

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