Europe has been slow in its response to China’s ‘One Belt, One Road’ initiative. This may be about to change. If both sides play their cards right, the EU-China Summit on June 29 could kick-start a much-needed conversation on synergies between China’s ambitious vision of an interconnected world and Europe’s mega investment plan to boost jobs and growth.
The rewards of such cooperation could be enormous. Increased EU-China connectivity will increase bilateral trade between the two partners, create new business opportunities for European and Chinese enterprises, and boost employment, growth and development in Europe and China — and in countries along the routes.
To start the dialogue, Europeans will have to take the long view. With the possibility of a Greek exit from the Eurozone getting ever closer, Britain’s plans for a referendum on its EU membership becoming more strident and growing discord over how to deal with the refugee crisis, European policymakers are thinking local, not global.
It’s not just about domestic difficulties; Europe’s neighbourhood is also on fire.
And yet, if Europe is to fulfil its ambitions of becoming a global actor while also meeting the domestic imperative of generating stronger economic growth and creating jobs, the EU policymakers must look beyond current emergencies to Europe’s medium-to-long-term needs.
This is the logic behind the $315bn investment plan drawn up by European Commission President Jean Claude Juncker to modernise Europe’s infrastructure. With its focus on investments in energy, digital, transport and innovation, the blueprint has the potential to revitalise European economies over the next decade.
But Europe can’t possibly do it alone. This is why it is important that EU governments, business leaders and academics start paying more attention to China’s headline-grabbing ‘One Belt, One Road’ initiative — and ways in which this could fit in with the EU’s own investment masterplan.
After months of staying relatively silent on the subject, the EU policymakers are beginning to talk about — and explore — the advantages of synergies between the Juncker plan and the ‘One Belt, One Road’ initiative.
Clearly, joining forces will unleash more resources. Implementing the EU investment plan will require the mobilisation of billions of euros of private and public funds as well as capital from the European Investment Bank (EIB). As European Commission Vice-President Jyrki Katainen said recently, the EU is hoping to attract Chinese investors to stump up some of the capital for the Juncker plan. The point has also been made by European Trade Commissioner Cecilia Malmstrom as well as by the European Commission president himself.
The hope is clearly that the EU connectivity projects will be able to interest both the Silk Road Fund and the Asian Infrastructure Investment Bank (AIIB). The EU is particularly interested in meeting the long-term infrastructure needs in southern, eastern and central European countries and in the Balkan states. Greece as well as some members of the so-called ‘16+1’ group of central and eastern European countries have already indicated their strong interest in such Chinese investments. If all goes according to plan, the eastern part of Europe could connect seamlessly with the western projects on the new Silk Road.
As the different ‘One Belt, One Road’ projects come on stream, business opportunities will open up for construction, transport and logistical companies — including European enterprises — across the route. EU-China trade is likely to get an important boost from the expected reduction in transport time and costs while EU exporters and investors will gain access to new growth markets in inland China and Central Asia. Such a development would give an added fillip to the current EU-China negotiations on a bilateral investment treaty.
As it passes through often-volatile and less-developed countries and regions, the ‘One Belt, One Road’ has the potential to unleash economic potential across the way, bringing stability as well as growth to Europe — and China’s — neighbourhood. Such a conversation could be especially useful within the 53-member Asia Europe Meeting (ASEM) where connectivity is also climbing up the agenda.
It’s not just about money, technology and goodwill, however. The EU insists that investment projects selected for financing under the ‘One Belt, One Road’ initiative must meet strict governance, environmental and technical standards, and result in sustainable development.
Moving from dialogue to action will require time and effort — and willingness to compromise. China has taken its time in putting flesh on the bones of the project and in explaining its many facets to a closely-watching world. A more detailed dialogue is now necessary before the EU and China get down to identifying and working on the nuts and bolts of their cooperation. Given their different working methods and cultures, European and Chinese policymakers, bankers and business leaders won’t find it easy to work together.
The devil will certainly be in the detail. Expectations will have to be managed on both sides. Selecting projects will be difficult and time-consuming. And there will be no quick results.
But in a world desperate for money, jobs and modern infrastructure, China has once again shown its capacity to surprise and to think big. Europeans must come on board the Silk Road ‘express’, not just watch it from the sidelines.