Can the EU’s Asia Strategy rival China’s ‘Belt and Road’?
China’s €750 billion Belt and Road Initiative (BRI) is so huge that the rest of the world is barely able to respond.
Also dubbed the New Silk Road trade corridor, the BRI is mega infrastructure project covering land, sea and air transport, as well as cable and pipelines that will run through 65 countries. Launched in 2013, it is widely seen as a tool to cement Beijing’s position as a new global superpower. The largesse creates ‘debt trap diplomacy’ through stringent loan-repayment conditions, making the recipient country susceptible to greater Chinese influence.
This is just one reason why the European Union this year announced its own rival scheme, which does not come with strings attached. The EU’s ‘Asia Connectivity Strategy’, launched at the Asia-Europe Meeting (ASEM) summit in Brussels in October last year, is being hailed as an alternative that will not saddle countries with debt they cannot repay.
EU leaders underlined at the summit that their strategy is based on sustainability, with investments respecting labour rights and environmental norms. The new strategy comes after European Commission President Jean-Claude Juncker has called for a more muscular EU foreign policy to match the bloc’s economic clout, taking on not just US President Donald Trump’s “America First” approach but also China’s energetic involvement in Africa and Asia.
The Belt and Road Initiative (BRI)
The BRI has been worrying Europe for a while. This spring EU ambassadors in China penned a report criticising it for discriminating against foreign businesses, its lack of transparent bidding processes and the limited market access for European businesses in China.
China’s involvement in European infrastructure is already controversial. For example, a Chinese-built highway in Montenegro sent the country’s debt soaring after it cost a quarter of its entire GDP. Beijing has taken over – wholly or in part – ports in Belgium, the Netherlands, Spain, Italy and most notably Greece. Other concerns are that China would gain control over strategically important infrastructure such as airports. During a visit to China in February, French President Emmanuel Macron warned that the BRI could lead to “hegemony, which would transform those that they cross into vassals.”
But does the EU have the money to back up its alternative plan? The Asian Development Bank (ADB) says Asia needs almost US$26 trillion in terms of infrastructure investment until 2030. Chinese President Xi Jinping said earlier this month that the country’s trade with Belt and Road countries had exceeded US$5 trillion, and it has already signed US$390 billion in deals as of this year.
By contrast, the Commission has proposed an increase of just €60 billion in the 2021-2027 external action budget to €123 billion. And even then, the plans do not specify how much will be directed towards infrastructure, or to Asia. EU officials have so far been reduced to vague declarations about Europe “sharing and engaging through one of the most developed transport networks and infrastructure financing programmes in the world: the trans-European transport network.”
So even if the EU plan adds up to hundreds of billions of euro in investment for Asia, China’s huge investments so far could leave the EU and others picking up the scraps.
This is far from an ideal situation for Europe. And yet, doing nothing is not an option. While the EU’s Asia Connectivity Strategy may not be able to compete with China’s new Silk Road, it is at least an attempt to fight back against Beijing’s dubious investment schemes.