Trésor-Economics No. 5 - Is the impact of China’s emergence on France as large as currently thought ?

The opening up of the French economy since 1960 has facilitated an enlargment of the range of disposable products and a downward pressure on prices. These developments have benefited consumers and have translated into a larger exposure of French firms to foreign competition. These pressures globalisation has brought to bear on companies, come from both the evolution of competitiveness and from France’s exposure to competition from each of its trading partners.

Although French competitiveness - measured in terms of unit labour costs (ULCs) - has improved compared with our European partners (excluding Ireland) and Japan, and although it has held fairly steady relative to the other countries, France has come under increasing pressure from globalisation over the last 20 years due to the growing openness of France's foreign trade.
Between 1983 and 1993, Spain and the US were the countries that contributed most to the increased pressure on France. Between 1993 and 2003, Spain continued to gain in importance, but contributed less than China and Ireland.

Heavy losses in competitiveness suffered by Germany between 1983 and 1993, and Italy and the United Kingdom between 1993 and 2003, powerfully helped to limit the increase of the aggregate pressure on France.