A transatlantic strategy to verify the Chinese Belt and Road initiative
Eight years after the announcement of the Belt and Road Initiative (BRI) – first conceived as One Belt, One Road – the European Union (EU) has a good plan to counter it and become a stronger geopolitical actor in the world. era of strategic competition. While European policymakers seem to have awakened to Chinese economic and geopolitical conceptions, several European capitals are still struggling to strike the right balance between fundamental principles of economic openness and security concerns related to a larger Chinese footprint. in Europe. In a seismic diplomatic turn, the European Commission now sees China as an âeconomic competitorâ in the pursuit of technological leadership, and as a âsystemic rivalâ promoting alternative models of governance.
Since 2013, most Chinese projects in Eurasia have been incorporated into the BRI, an brainchild of President Xi Jinping, a foreign policy narrative that exports the âChinese dreamâ that was entrenched in the constitution of the Chinese Communist Party during the Nineteenth Party Congress. Today, the BIS comprises over 130 countries and international organizations, representing 40% of global GDP and over 60% of the world’s population. Mimicking the old Silk Road, the BRI sets out the new Chinese international vision, aiming to place China as a leading power on the world stage, with greater capacity to shape global rules, norms and institutions. . China seeks to achieve these goals by building infrastructure and networks, while rallying diplomatic and political advantages in Beijing.
In line with this vision, Beijing expands China’s presence in the global economy, reduces its technological dependence on the West – in line with its âMade in China 2025â – and maintains favorable external influence while addressing challenges. national.
The BRI is an economic and geopolitical necessity for Beijing. The aim is to unlock the potential of new sources of growth and export opportunities for China’s surplus industrial capacities in its ailing industries (construction, steel and cement), to diversify the supply routes of China. China, to support the internalization of Chinese companies and, finally, to advance innovation.
Despite Beijing’s significant investment to strengthen the narrative power of the BIS – by focusing on the mantra of a ‘win-win’ strategy, by promising to advance global development and by portraying China as a benevolent rising power – the BIS has become controversial and has caused a backlash in several countries. . Large BIS infrastructure projects present considerable risks ranging from debt sustainability to governance, environmental and social risks, exacerbated by the platform’s lack of transparency and openness, and issues of weak governance in several of the participating countries. Even before Covid-19, the World Bank estimated that nearly a third of the initiative’s partner countries were at high risk of debt distress.
The lack of transparency of the resources allocated to the BRI since 2013 raises legitimate concerns. The estimates are very diverse: from 4,000 to 8,000 billion dollars announced by the Chinese, to 800 billion dollars by the Global Investment Tracker of the American company. Institute, down to $ 575 billion estimated by the World Bank. Two-thirds of Chinese spending (mostly loans) on completed projects has gone to the energy and transportation sector, and 60% of Chinese-funded projects go to Chinese companies. These facts reinforce claims of Chinese internalisation and, when the BIS was announced, Beijing incorporated projects that had been going on for decades under the new BIS umbrella.
Initially seen as an opportunity for European economic recovery from the 2008-09 eurozone crisis, the EU has taken a cautious approach to the BIS. However, it soon became clear that the global development promised by the BIS created challenges for economic norms, standards and the EU’s efforts to further liberalize.
In fact, as the EU tried to understand China’s engagement in Europe, Beijing was carefully targeting countries of central, eastern and southern Europe by signing bilateral agreements. Today, seventeen EU countries are official members of the BRI, eleven of which are part of the 16 + 1 Initiative along with Eastern Europe and the Western Balkans. For Beijing, membership is a victory. It should be noted that Italy, a member of the G7 and large economy of the EU, is part of the BRI, although countries like Austria, another country that wanted to join the project in 2017, have since retreated in due to new economic and security developments. in Europe.
Although Europe has traditionally been slow to react to an increasingly assertive China, the European Commission published its Connecting Europe and Euro-Asia strategy in September 2018. The document was an attempt to formulate the European vision on connectivity and infrastructure development on the basis of Western economic and institutional standards and principles. The strategy defined the conditions for European cooperation and was seen as a model to support European values ââand standards on âconnecting Europe and Asiaâ. But despite bold ambitions, the proposal was not backed by euros.
This is why the Global Gateway, the EU’s new strategy, is good news; It is obviously intended to counter the BIS in light of growing concerns about China’s assertive foreign and economic initiatives. The Global Gateway was presented by Ursula von der Leyen, President of the European Commission, as an essential step for the EU to invest strategically around the world. The Global Gateway is a platform for massive investment of sustainable and quality projects in infrastructure and skills, in phase with the green and digital transition which plans to mobilize 340 billion dollars between 2021-2027, with 150 billion dollars of funding for guaranteed infrastructure investments, $ 20 billion in grants from the EU budget and an additional $ 160 billion in planned investments from European and development-oriented financial institutions.
In geo-economic terms, the Global Gateway will help the EU to be competitive in the global economy. Over the past thirty years, the European economy has grown 2.5 times, while the Chinese economy has grown almost forty times. In 1990, the Chinese economy represented 4% of world GDP (based on purchasing power parity) and, in 2021, it now represents 18% of the world economy. Meanwhile, the EU’s share of the world economy fell to 15 percent from 25 percent in 1990, according to IMF data. Due to industrial relocation and the transfer of global value chains and new technologies, China has not only become the largest exporter of goods in the world economy, accounting for 18% of the share of world exports, but it has also become the largest exporter of goods in the world economy. also created dangerous strategic dependencies on Chinese products for Western countries, as we saw during the Covid-19 pandemic. These dynamics will have important and far-reaching ramifications for Europe’s prosperity, from trade to security.
There is a need to better assess and understand the risks and opportunities emerging from the BIS. The EU should not only build a solid assessment of the BRI, but also establish a common European and transatlantic position. If nothing is done, the BRI could jeopardize the EU and transatlantic cohesion. Some European economies may welcome Chinese investment as a source of financial capital, infrastructure development and market opportunities. This concern could lead to divergent views within the EU due to competing interests in relation to the strengths and needs of European national economies. Therefore, assessing the risks involved in these investments could be difficult. To be clear, the BIS is not just about infrastructure projects and financial implications, it is about norms, values ââand standards and the future of the rules-based international order.
To counterbalance the BRI, the transatlantic community must not only better market what is already being done, but also develop a new strategy that offers targeted countries greater opportunities. At the last summit, G7 leaders pledged to develop a comprehensive development infrastructure plan focused on “values, high standards and transparency” to reduce the existing infrastructure deficit of $ 40 trillion. in the developing world by 2035. The US-led Build Back Better World (B3W) initiative serves as a catalyst to boost funding for public-private partnerships related to climate and health security, digitization and ‘equality.
B3W leverages America’s Blue Dot Network, a collaboration that aims to build a global network through loan-based financing to build roads, bridges, airports, ports and power plants in developing countries . To achieve global development goals, the World Bank estimates that approximately $ 1.5 trillion per year should be invested in infrastructure. This is why it must be based on a coordinated plan. Different partners will have different geographic and economic orientations, but the sum of the coordinated initiatives will cover low- and middle-income countries around the world and increase their impact and reach.
We must not miss the fact that the transatlantic economy is the most prosperous economic bloc in the world, with $ 36 trillion in real gross domestic product, driven by innovation, rules-based institutions and technological competitiveness. . We are not seriously capitalizing on the resources of the transatlantic economy. The focus should be on restarting the transatlantic economy through a powerful reinvention of the West, including a transatlantic strategy on China. It is only through a coordinated response that the EU and the US will have stronger negotiating power to counter the BIS and force reciprocity in economic and political relations with China.
The EU and US should do a better job of communicating their existing development agendas in a cohesive narrative to compete with China. It is not just about new resources, but about using existing resources more strategically and in accordance with a strong transatlantic strategy. Take the example of Global Gateway. The $ 340 billion is mostly a mix of existing commitments (grants, loan guarantees) from the EU that need to be streamlined under a single, recognizable brand. The West needs a comprehensive transatlantic plan to attract private investment and capitalize on financial resources on both sides of the Atlantic while working closely with multilateral development banks and international financial institutions. To persuade private investors to invest capital in high-risk infrastructure projects in the developing world, we need a visionary plan of bankable and coordinated projects, based on transatlantic private-public coordination.