France will encourage companies to diversify their operating hubs to locations in Southeast Asia and elsewhere in a bid to lower the supply chain's exposure to China, French Trade Minister Olivier Becht told Nikkei.

"For de-risking, it's necessary to reduce the dependence on China" when it comes to production and procurement, Becht said.

The European Union simultaneously regards China as a partner, an economic competitor and a systemic rival. That designation "has not changed," he said.

When it comes to supplies of semiconductors and other components, Becht raised the idea of shifting production to the Association of Southeast Asian Nations and certain African countries, areas he regards as "geopolitically stable," as well as to Europe.

France took in 64.3 billion euros ($70 billion) worth of imports from China in 2021, which accounted for 10% of all imports in value. Becht acknowledged that France cannot completely decouple itself from China, though he seeks to lower its dependence on the Asian country.

For strategic industries in particular, such as semiconductors and pharmaceuticals, Becht is looking to encourage corporations to move production centers and diversify suppliers.

Many Japanese companies have operations in Southeast Asia, and French companies have deep historical ties to African nations. He describes Japanese and French corporations as "complementary" in that regard.

"We can realize Franco-Japanese joint investments in third nations," he said.

The Inflation Reduction Act passed in the U.S. grants incentives for electric vehicles manufactured in North America. France has called on Washington to ensure that European companies are not put at a disadvantage.

"We are concerned it would run against World Trade Organization rules," said Becht, speaking of the North American EV production provision. At the same time, he also spoke of plans to boost industrial competitiveness in Europe.

Becht is due to arrive in Japan on Sunday. One goal for the trip is to lobby Japanese companies to invest in France

"To France, Japan is an exceptional and privileged partner," he said, drawing a contrast with China.

Paris is rolling out the 54 billion-euro France 2030 initiative to support the transformation of industries such as carbon reduction and biotechnology.

"Japanese companies will be able to benefit from financial aid aimed for these purposes" said Becht.

Source: Nikkei Asia

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