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Europe sees few benefits from China’s Belt and Road

When Chinese President Xi Jinping first launched his “Silk Road Economic Belt” and “21st Century Maritime Silk Road” in the autumn of 2013, few details were available on just how Xi’s initiative to reinvigorate the ancient land and maritime trade routes, collectively known as the Silk Road, would play out. Six years on, rebranded as the Belt and Road Initiative (BRI) and enshrined in the Communist Party’s constitution, Xi’s signature foreign policy has taken on more shape. BRI investment is now projected to bring more than US$1 trillion of funding for foreign infrastructure over a 10-year period from 2017.

Despite the BRI having drawn a fair amount of criticism over a lack of transparency, environmental degradation, and poor governance, assurances from Beijing still entice other countries seeking investment and their companies seeking financial gain. During his speech at the Belt and Road Forum for International Cooperation in May 2017, Xi promised: “China will endeavor to build a win-win business partnership with other countries participating in the Belt and Road Initiative.”

A Belt and Road for Europe?

As part of the ancient Silk Road, Europe should surely benefit from expanded Chinese investment, as argued by Bruno Maçães, a Portuguese politician, in his book The Dawn of Eurasia: “One would think that the historic project of reviving the land routes between Europe and Asia is one in which Europe should play an active role.”

Yet a report released on January 16 by the European Union Chamber of Commerce in China suggests European companies have so far failed to reap substantive benefits from China’s Belt and Road Initiative. The report, “The Road Less Traveled: European Involvement in China’s Belt and Road Initiative,” which includes surveys and interviews with Chamber members, concludes that European companies have played a “peripheral role” in BRI projects, describing their level of involvement as “crumbs from the table.”

More than half of respondents complained of insufficient bidding information being provided, with nearly 40% claiming that procurement systems were not transparent. Given these obstacles, a mere 20 of 132 Chamber members reported they had bid on at least one BRI-related project – seven as direct contractors and 13 as subcontractors.

Indeed, Europe has seen little of this BRI-related foreign direct investment, and many European-sourced agricultural, food and beverage products have failed to penetrate Chinese markets due to high tariffs and non-tariff barriers.

A Chinese initiative

In response to the report’s findings, Geng Shuang, a spokesman for the Chinese Ministry of Foreign Affairs, responded: “I haven’t read that report yet. But after hearing your description of it, I think their views and conclusions are inaccurate.”

Geng’s dismissive remarks and the failure of European companies to participate actively in a Beijing-led initiative should come as no surprise. Foreign companies have long known that China takes what it needs for development from foreign companies – from the transfer of technology as a condition for investing in China to the stealing of intellectual property. And now they know Chinese companies and researchers are compelled under Chinese law to share technology with the Chinese military.

Xi’s Belt and Road Initiative is now largely recognized in part as an effort to create new international markets for China’s weak state-owned enterprises, whose domestic markets have become saturated and unprofitable from over-investment – despite state subsidies. Further, Belt and Road projects are also intended to reallocate surplus labor, for example by sending Chinese construction workers overseas to help build critical infrastructure rather than hiring local workers. Much of this infrastructure (ports, highways, railways and airports) is intended to provide secure transport routes for the necessary minerals, agricultural foodstuffs, and oil and gas supplies to help fuel China’s continued growth.

As part of Xi’s pursuit of the so-called “Great Rejuvenation of the Chinese Nation,” the economic benefits the BRI brings to Chinese interests make sense, and much of Xi’s extended legitimacy rests on providing for the growing desires of the people. But no one should be taken in by promises of a “win-win business partnership.”

Much like the unequal treaties imposed on China in the 19th and early 20th centuries by European and other mercantilist powers during its “century of humiliation,” Xi’s Belt and Road Initiative is all about expanding and securing China’s economic interests – this time, one hopes, without the use of gunpowder.


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