Hi-tech cooperation between #China and #EU has huge potential

| February 9, 2020

China’s Belt and Road Initiative (BRI), sometimes referred to as the New Silk Road, is one of the most ambitious infrastructure projects ever conceived. Launched in 2013 by President Xi Jinping, the vast collection of development and investment initiatives would stretch from East Asia to Europe, significantly expanding China’s economic and political influence – writes Colin Stevens.

BRI seeks to revive the ancient Silk Road trade routes to link China with other countries in Asia, Africa and Europe through building a trade and infrastructure network.

The vision includes creating a vast network of railways, energy pipelines, highways, and streamlined border crossings, both westward—through the mountainous former Soviet republics—and southward, to Pakistan, India, and the rest of Southeast Asia.

China’s colossal infrastructure investments promise to usher in a new era of trade and growth for economies in Asia and beyond.

Increasing Chinese influence in Europe has been a growing source of anxiety in Brussels in recent years.

So, what are the implications of China’s growing influence as a global actor for the EU and its neighbours? We asked a range of experts for their views.

Sir Graham Watson, a former senior UK MEP, is among those who support the exciting initiative while at the same time warning that the EU needs to be closely involved.

Sir Graham, formerly a Liberal deputy, said, “The EU should embrace an initiative which will improve transport links across the Eurasian landmass and not allow China to own it entirely. To realise its full potential, this initiative must be a two-way street.

“Rather than allow the PRC to buy up and monopolise infrastructure such as the Port of Piraeus we should be investing in it together. Only that way can we tame China’s expansionist ambitions and tie it down into co-operation.”

Similar comments are voiced by Fraser Cameron, Director of the EU-Asia Centre in Brussels who said that China had “learned some important lessons from the first two-three years of the BRI, especially on financial and environmental sustainability.”

He adds, “This means that the EU, with its own connectivity strategy, could now consider partnering with China, as well as Japan and other Asian partners, to develop infrastructure projects of benefit to both continents.”

Paul Rubig, until recently a veteran EPP MEP from Austria, told this site that the “whole world, including the EU, needs to be part” of the BRI.

He added, “The scheme connects people through infrastructure, education and research and stands to benefit European people greatly

“The EU should be investing in the BRI because it will be a win win for both sides, the EU and China,” said Rubig who is closely involved with SME Europe

Similar comments were aired by the vastly experienced Dick Roche, a former Europe Minister in Ireland, who said, “BRI and the EU’s involvement in it makes perfect sense. It will help re-establish our historic connections with China. Yes, there are some differences between the two sides but BRI is in the mutual interests of the EU and China. Europe can play an active role in the initiative by maintaining dialogue with China.

“That is the best way forward and not by following the U.S approach to BRI. The U.S stance is a backward step and will achieve nothing.”

Roche, now a Dublin-based consultant, added, “If you look at what is happening in China now compared with 50 years ago the progress that is being made, including benefits brought about by BRI, are incredible.”

BRI investment began to slow in late 2018. Yet by the end of 2019, BRI contracts again saw a big uptick.

The U.S has voiced opposition, but several countries have sought to balance their concerns about China’s ambitions against the BRI’s potential benefits. Several countries in Central and Eastern Europe have accepted BRI financing, and Western European states such as Italy Luxembourg, and Portugal have signed provisional agreements to cooperate on BRI projects. Their leaders frame cooperation to invite Chinese investment and potentially improve the quality of competitive construction bids from European and U.S. firms.

Moscow has become one of the BRI’s most enthusiastic partners.

Further reflection comes from Virginie Battu-Henriksson, EU spokesperson for Foreign Affairs and Security Policy, who said, “The starting point for the EU’s approach to any connectivity initiative is whether it is compatible with our own approach, values and interests. This means that connectivity needs to respect the principles of sustainability and a level playing field.

“When it comes to China’s Belt and Road Initiative, the European Union and China should share an interest in making sure that all investments in connectivity projects meet these objectives. The European Union will continue to engage with China bilaterally and in multilateral fora to find commonalities wherever possible and push our ambitions even higher when it comes to climate change issues. If China fulfils its declared aim of making the BRI an open platform that is transparent and based on market rules and international norms, it would complement what the EU is working for – sustainable connectivity with benefits for all involved.”

Elsewhere, a senior source at the EU foreign affairs directorate noted that the Belt and Road Initiative “is an opportunity for Europe and the world, but one that must not only benefit China.”

The source said, “EU unity and coherence are key: in cooperating with China, all Member States, individually and within sub-regional cooperation frameworks have a responsibility to ensure consistency with EU law, rules and policies. These principles also apply in terms of engagement with China’s Belt and Road Initiative.

“At the EU level, cooperation with China on its Belt and Road Initiative takes place on the basis of China fulfilling its declared aim of making the BRI an open platform and adhering to its commitment to promoting transparency and a level playing field based on market rules and international norms, and complements EU policies and projects, in order to deliver sustainable connectivity and benefits for all parties concerned and in all the countries along the planned routes.”

At last year’s EU-China Summit in Brussels,  the two sides’ leaders discussed what they called the “huge” potential to further connect Europe and Asia in a sustainable manner and based on market principles and looked at ways to create synergies between the EU’s approach to connectivity.

Noah Barkin, a Berlin-based journalist and a visiting fellow at the Mercator Institute for China Studies, noted that when Wang Yi, China’s top diplomat, visited Brussels in December, he delivered a key message to Europe.

“We are partners, not rivals,” he told his audience at the European Policy Centre think tank, calling on the EU and Beijing to draw up an “ambitious blueprint” for cooperation.

Such cooperation is happening right now – thanks to BRI.

Business Europe’s “China Strategy”, recently published, points out that the EU is China’s most important trading partner, while China is the EU’s second most important trading partner. Total bilateral trade flows in goods grew to EUR 604.7 billion in 2018, while total trade in services amounted to almost EUR 80 billion in 2017.

And, says Business Europe, “here is still plenty of untapped economic potential for both sides.”

The strategy notes that the EU is China’s most important trading partner, while China is the EU’s second most important trading partner. Total bilateral trade flows in goods grew to EUR 604.7 billion in 2018, while total trade in services amounted to almost EUR 80 billion in 2017. And there is still plenty of untapped economic potential for both sides.

The Chinese and European economies have benefitted tremendously from China’s accession to the WTO in 2001.

It says, “The Chinese and European economies have benefitted tremendously from China’s accession to the WTO in 2001.The EU should continue to engage China.”

Many new opportunities have already emerged as a result of new infrastructure that has been completed along the Belt Road route.

For example, Italy and China have worked to strengthen their relations and cooperation on the digital economy via a “digital” silk road and tourism.

A digital silk road is seen as a significant part of BRI. China, with the largest number of internet users and mobile phone users in the world, stands at the world’s largest e-commerce market and is widely recognized one of the top players in big data.

It is this huge market that seasoned observers like Watson, Rubig and Roche believe the EU should now try to tap in to, including via BRI.

The European Institute for Asian Studies cites the Budapest-Belgrade railway link refurbishment as a “great” case study to gain a better understanding of the BRI.

The project is part of the 17+1 Cooperation and the Belt and Road Initiative (BRI). It had been announced in 2013 but was stalled on the Hungarian side until 2019 due to EU tender regulations. The project has progressed differently on the Hungarian side than it did on the Serbian side as a non-EU member, due to the EU’s intervention, says the EIAS report.

“A digital silk road is a significant part of BRI. China, with the largest number of internet users and mobile phone users in the world, stands at the world’s largest e-commerce market and is widely recognized one of the top players in big data.

But, clearly, there is more to do to realise its full potential.

The European Union Chamber of Commerce in China (European Chamber), compiled its own study, The Road Less Travelled: European Involvement in China’s Belt and Road Initiative (BRI). Based on a member survey and extensive interviews, the report highlights the “peripheral” role currently played by European business in the BRI.

Even so, hi-tech cooperation between China and EU has huge potentials, and dialogues and mutual trust are keys to forming closer digital ties between the two sides, Luigi Gambardella, the president of the China EU business association, said.

China. by way of further example, successfully launched the twin Beidou-3 satellite last September, contributing to the digital Silk Road initiated by China in 2015, which involves helping other countries to build digital infrastructure and develop internet security.

Commenting on the digital Silk Road, Gambardella said it has the potential to be a “smart” player in the Belt and Road Initiative, making the BRI initiative more efficient and environment friendly. The digital links will also connect China, the world’s largest e-commerce market, to other countries involved in the initiative.

Andrew Chatzky, of the Council on Foreign Relations, says, “China’s overall ambition for the BRI is staggering. To date, more than sixty countries—accounting for two-thirds of the world’s population—have signed on to projects or indicated an interest in doing so.”

“Analysts estimate the largest so far to be the $68 billion China-Pakistan Economic Corridor, a collection of projects connecting China to Pakistan’s Gwadar Port on the Arabian Sea. In total, China has already spent an estimated $200 billion on such efforts. Morgan Stanley has predicted China’s overall expenses over the life of the BRI could reach $1.2-1.3 trillion by 2027, though estimates on total investments vary,” he said.

The original Silk Road arose during the westward expansion of China’s Han Dynasty (206 BCE–220 CE), which forged trade networks throughout what are today the Central Asian countries. Those routes extended more than four thousand miles to Europe.

Today, BRI promises to, once again, put China and Central Asia – and maybe the EU – at the epicentre of a new wave of globalisation.

 

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