6 Oct 2017
The EU: Pondering strategic engagement with China's Belt and Road Initiative
By Richard Ghiasy and Jiayi Zhou, Stockholm International Peace Research Institute (sipri)
The EU and China both have an interest in promoting greater connectivity and stability in Eurasia. In China’s case, this is largely achieved through its visionary Belt and Road Initiative (BRI). So far, the EU has given the initiative a lukewarm welcome and is still pondering how to engage it strategically. This is partly because the BRI remains operationally uncoordinated, and the EU remains concerned about commercial feasibility, transparency, sustainability and environmental issues.
But differences in need, interest and strategic planning among EU member states in relation to China also hamper a common response. While the EU’s cautious approach could certainly lead to a more well-informed and gauged response, an overly long delay may come at the risk of the EU being left behind as China takes a stronger lead in shaping the Eurasian landscape.
The various EU interests in the Belt and Road Initiative
The BRI is China’s vision for comprehensive connectivity and economic cooperation, mostly focused on, but not limited to, the whole of Eurasia. The initiative has generated diverse degrees of interest throughout the EU. Member states in Central and Eastern Europe, as well as Greece, Portugal and Spain have mostly reacted enthusiastically to it. Given their own poor economies, these states have welcomed Chinese investment in large infrastructure projects, and they see Chinese investment as a way to boost their local economies and employment.
In Italy, commercial prospects have led local business communities to take active steps towards engaging with the BRI, and at the national level the Italian Government itself is seemingly becoming more interested. Ahead of the Belt and Road Forum held in Beijing on 14–15 May, Italian Prime Minister Paolo Gentiloni said that Italy is ‘enormously interested’ in the BRI.
France’s policy community interest in the BRI seems to have peaked already, although the incoming Macron administration could revisit the initiative. Many regional and municipal governments in Germany have indicated a strong desire to engage with China on the BRI, but at the national level the response has been more restrained. The German and Dutch Governments do not want to engage too closely without a better understanding of the BRI’s long-term strategic implications, and do not want to sideline the EU in the process. Nordic governments have so far not indicated much interest in the BRI, although interest in Denmark is starting to pick up.
At the supranational level, the EU has established together with China, the EU-China Connectivity Platform, through which the two have agreed to cooperate on a number of investment projects within the EU and China. This has been the EU’s most progressive response to the initiative.
But beyond this limited economic cooperation, the EU has not so far not engaged with China’s BRI on a more strategic level, despite it having strategic implications for the EU’s political, economic and security interests abroad.
‘A Global Strategy for the European Union’s Foreign and Security Policy’, the EU’s policy document of June 2016, obliquely references the BRI, positing the need for a ‘coherent approach to China’s connectivity drives westward’ and improved connectivity between the EU and Asia.
The Global Strategy also refers to the need for improving the ‘resilience’—the ability of states and societies to withstand and recover from internal and external crises—of EU neighbouring states, including those stretching into Central Asia. This is a core BRI region, and improving the resilience of these ‘fragile’ states is in fact explicitly pursued by China through the BRI.
Both China and the EU see economic development as a pillar of stability, but their development support approaches differ. China has tended to emphasize physical infrastructure and no-strings-attached investment, while the EU has tended to promote institutional reform, good governance and rule of law as pre-conditions for inclusive economic growth. Both approaches are necessary but neither are alone sufficient achieve sustainable development. And while these different approaches in theory are complementary, the EU emphasizes normative values such as human rights, democracy and civil society in a way that makes it more difficult for the two sides to engage in cooperation.
Indeed, that divergent approaches and standards are a major sticking point for cooperation was made apparent at the recent Belt and Road Forum. The EU rejected a key trade statement because it did not include commitments to free trade, social and environmental sustainability and transparency on tendering processes.
Nevertheless, to foster the kind of developmental outcomes sought, the EU needs to engage not only with states in Eurasia, but also with other larger powers, in order to build a common and coordinated agenda. This includes not only China, but also major actors such as India, Japan, and the USA, as well as multilateral organizations such as the Association of Southeast Asian Nations (ASEAN). Of these actors, however, it is China that has the most ambitious vision for Eurasian connectivity and development, along with the financial and political clout to back much of it.
Influencing the BRI through engagement
As the BRI unfolds over the next few years and decades, the EU needs to be aware that China’s BRI efforts and stepped-up presence in Eurasia will probably be a significant shaper of future regional governance in economic, financial, political and even security terms. As China’s overseas investments and economic footprint grows, so will its political and security presence. The Chinese naval base in Djibouti is one such example of how China’s overseas interests have evolved in recent years.
Leaving China so much space to pursue the BRI alone may eventually impinge on the EU’s long-term strategic interests. Thus, it is even more pertinent for the EU and other Eurasian stakeholders to engage strategically with China in order to jointly shape the vision of the BRI and its practical implementation. China has actually welcomed such involvement: Chinese President Xi Jinping reiterated the aim and need for inclusiveness at the recent Belt and Road Forum.
There are several ways in which this engagement might be achieved, some more feasible than others. In the medium-term, EU-based companies and investment banks, such as the European Investment Bank or European Bank for Reconstruction and Development, could pursue joint investment projects in third countries outside of the EU and China. This kind of concrete economic cooperation could help align Chinese and local investment standards with EU and global regulatory, environmental and labour standards, and increase transparency and reduce corruption.
Beyond engaging with China bilaterally, the EU could also work multilaterally to participate in joint consultations with relevant stakeholders. A consultation and coordination mechanism with BRI stakeholders, including China, could allow for more information sharing, joint planning and monitoring, and also mitigate some of the more political and geopolitical tensions related to the BRI. Such consultations could take place within existing mechanisms, such as the biennial Asia–Europe Meeting (ASEM).
The BRI also represents an opportunity for the EU to work towards more formal development cooperation with China and other stakeholders. One such cooperation platform could, for instance, be through the United Nations Sustainable Development Goals (SDGs). China has already partnered with the UN in the context of the BRI, and the SDGs—being universal in scope and in acceptance—are a relatively apolitical development framework worth much further exploration.
Of course, there remain concerns: namely, that the BRI ultimately serves China’s geostrategic aims, and is unilateral (or at best bilateral) rather than multilateral in nature—at least so far. Moreover, many EU policy advisors and policymakers are still not quite sure of the BRI’s political longevity, or the BRI’s financial and commercial feasibility.
Furthermore, several (sub)regions in which BRI projects will be implemented are politically and economically fragile, conflict-affected, or marked by poor governance. This puts into doubt the degree to which these investment projects will be successful.
At the same time, however, the public goods that the BRI intends to provide could certainly catalyse socioeconomic development and a spirit of cooperation throughout Eurasia and further many of the EU’s own strategic aims. Admittedly, EU–China cooperation, and that of other stakeholders, on improving third states’ resilience might take place only gradually given geopolitical realities and varying values and norms.
That said, the EU should recognize that influencing an initiative such as the BRI is easier done from the inside than from the outside.
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