China bristles at French industrial espionage claims: Maley

China’s enthusiasm for buying up the debt of struggling eurozone countries will be put to the test in the face of accusations that Chinese companies were responsible for alleged bribes paid to senior executives of Renault, the French carmaker.

The Chinese have reacted angrily to reports in the French media that Chinese companies were behind the secret payments. “The accusations are baseless and irresponsible, and the Chinese side cannot accept them,” said Hong Lei, a Chinese foreign ministry spokesman.

Tensions between Paris and Beijing are particularly terse because the French government owns a 15% stake in the carmaker. But at this stage, the French government is trying to keep tensions from flaring out of control.

French budget minister, François Baroin said in a radio interview overnight that there was “no official accusation by France and the French government regarding another country today.” He added: “We are in the middle of an inquiry. Renault has been the victim of a war of economic intelligence.”

But reports in the French media overnight fuelled speculation that a major Chinese electricity transmission and distribution company was behind the industrial espionage. The spying centred on Renault’s flagship electric vehicle car program in which it, along with its partner, the Japanese carmaker, Nissan, have invested 4 billion euros ($US5.2 billion).

According to French media reports, Renault’s internal inquiries have unearthed evidence of suspect payments made into bank accounts of senior Renault executives. A payment of 500,000 euros was made into a Swiss bank account, and 130,000 euros was paid into a bank account in Liechtenstein.

These secret payments reportedly passed through a series of intermediaries in Shanghai and Malta.

Renault declined to comment on the latest reports, although the company’s chief operating officer, Patrick Pelata, has previously said the company appeared to have been the target of an “organised international network” operating on behalf of “foreign interests”.

Suspicions that Chinese companies are behind the secret payments were boosted by a preliminary report by the economic branch of the French secret services.

Renault suspended three senior executives last week in relation to the allegations. It is due to lodge an official complaint later today, which will trigger an official investigation by the French intelligence services.

At this stage, Renault is confident that key technological information concerning the chemistry of the electrodes, and the design of the electric batteries has not been divulged. But it admits that details could have been leaked on the cost and design of the electronic cars, and on the business model for the electric car program.

However, some French media reports quoted claimed that Renault did not yet have a clear view on all the extent of the information that had been leaked on its electric car program.

The Renault industrial espionage scandal is likely to exacerbate anxieties among Western companies as developing companies increasingly seek to boost their own high-tech industries.

European, Japanese and US companies have long grumbled that they have been forced to “transfer” or to sell their technology to their Chinese joint venture partners in order to obtain access to the Chinese market.

These Western companies then find that their Chinese partners then absorb this technology, introduce a few minor innovations, and then sell the products in China using a separate, domestic brand.

Even worse, the foreigners often find themselves competing in global markets against their former Chinese partners, who are able to sell the high-tech products at extremely competitive pricing.

But the latest Renault bribery accusations come at a particularly unfortunate time. Relations between Paris and Beijing look likely to be strained, at a time when the eurozone is desperately hoping that China may use some of its massive foreign currency reserves to buy up eurozone debt.

This article first appeared on Business Spectator.