The increasing change in consumer demand have shifted China's economy away from infrastructure investment towards domestic consumer demand. In addition to this change in economic preference, it is expected to generate growth for other industries in the near future. France acknowledged China's fast growing market and saw an opportunity to market its economy for future investments. Therefore France is hoping to get a head start in growing sectors such as health care, agricultural products, food and beverages, and services that will aid urbanization. Currently China is one of the premier leaders in these sectors and is a significant source of future growth. Frances exports to China consist mainly of luxury goods, aircraft and nuclear energy sectors. Due to the opportunity that will come with China's economic reform and development, it has opened up new opportunities for French companies. An incentive to attract the Yuan, French officials have announced that it will make Chinese business travelers, tourists and students to visit France.
The increase in demand for the Chinese Yuan will shift the demand in the French Market to the right. This shift will cause the Yuan to appreciate in value and therefore cause the Yuan to hold more purchasing power.
The increase in the demand for Chinese cash was caused by France recognizing the opportunity to further develop specific sectors within its economy. China has been a prominent leader in growth and continues to have record growth rates. Perhaps a resolution to the demand of Chinese cash can be solved by France proposing a free trade agreement. This incentive will give China an opportunity to trade more freely with the European nation as it could use France as a gateway.
Link: http://www.nytimes.com/2013/05/07/business/global/officials-market-french-economy-to-china.html?ref=china
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