The European perspective of China’s Belt and Road Initiative (BRI) is a colourful myriad of opinions, each more substantial than the other. For us, examining Europe and China’s concerns are equally important to understand what is presented for our businesses by these global forces. While trying to define the Belt and Road Initiative, the EU chose the description by Dr. FP van der Puttens as a “broad conceptual framework for policies contributing to greater economic integration within Asia, between Asia and Europe, and between Asia and Africa”.
Europe and China have always made a concerted effort to understand each other and move towards closer integration of trade and development. To address each other’s concerns, Latvia hosted a minister-level summit between the EU and China to discuss the developing synergies between the BRI and Trans-European Transport Network (TEN-T). This diplomatic effort had a significant impact on smaller players trying to leverage opportunities along the New Silk Road.
A Short History Lesson
China and Europe have been mutually investing in each other for the past 25 years. After the formal announcement of the BRI in Kazakhstan, in 2013, it allowed for European members states and China to enter formal agreements. Although there are no agreements at an EU-China level, China has entered many bilateral agreements with different member states and other European non-member states. Many EU institutions have also signed Memorandum of Understandings with the Chinese government for cooperation and growth.
What is interesting to note is the 16+1 framework of cooperation which includes numerous MOUs between 11 EU members and 5 Balkan States. These MOUs aim towards building efficient connectivity between China and Europe by developing the China-Europe Land-Sea Express Line. Federal level cooperation, such as these, assist in ease of business and the growth of local players.
Heading Towards Closer Cooperation
When National Development and Reform Commission (NDRC) released its ‘Vision and Action’ document in 2015, one of its central area of focus was capacity building, with a particular emphasis on the transport sector. All areas of transport are mentioned, with clear intentions on how to develop them. A significant example is the MOU between Deutsche Bahn and China Railways to improve the Eurasian Land-Bridge. The EU rail sector as received much boost from Chinese authorities. A total 19 EU states and 12 non-EU states are undertaking capacity building with China.
The most obvious benefit that the EU acknowledges is the development of rail routes that have increased the movement of volume via rail. It has also increased activity in the ports along the Baltic Sea and the North Sea. Experts predicted that by 2030, the rail infrastructure capacity would quickly meet the demands of the forecast. However, the outlook has changed due to the coronavirus, and these demands will be achieved much earlier than predicted.
Another way in which closer cooperation is being conducted is by employing Chinese representatives in the European market and vice versa. For the transport sector, a focus on TEN-T to develop corridors would boost opportunities and prevent a bottleneck of the EU transport system. EU and China are focused on transparent growth of trade and foreign direct investment.
EU also recognises the construction risk that China undertakes in these infrastructure projects, that prevents a burden on local contractors. The BRI offers a chance to develop the rail and shipping industry by proactively supporting many projects across the 65 countries that have joined the initiative. EU’s interest in boosting rail freight also lies in its commitment to cut down carbon emissions. Finally, EU businesses in Central Asia have also received a boost because of the developments conducted by the BRI.
Tackling Unfounded Fears
For small and medium-sized players understanding these geopolitical collaborations play a considerable role in growing a certain economic sector and what to make of the future developments. However, often there are myths associated with the BRI that prevent businesses to take swift decision and take the next step forward. The jargon of legal political and legal documents is frequently lost in translation and what we get is the bare minimum of the essence.
It is not uncommon for European businesses to imagine that quality of Chinese companies, infrastructure and products are not up to the standards. EU agencies fear the EU standardisation levels will deplete if the Chinese players increase their activity in the region. However, these are unfounded fears, as studies show that Chinese contractors are rapidly adhering to EU laws and standards, producing products that are equally matched. The central aim of all MOUs signed by China and other participating actors is the promotion of a level- playing field and mutual accountability. These MOUs are a reflection of acceptance of Chinese presence and support in the European market, and an opportunity for growing your business beyond the borders of EU.