When All Roads Lead to Beijing. Assessing China’s New Silk Road and its Implications for Europe

Abstract

The Belt and Road, unveiled by President Xi Jinping in late 2013, is China’s most ambitious geo-economic and foreign policy initiative in decades, combining a land-based Silk Road Economic Belt and a sea-based 21st Century Maritime Silk Road which connect China to Europe. With this grandiose initiative, Beijing seeks to tackle industrial overcapacity at home and acquire political influence abroad through investment. Sitting at the end-point of the maritime Silk Road, Southeast Europe and the Mediterranean have been the main focus of investment in infrastructure projects so far. If managed successfully by both sides, China’s Belt and Road could be a great opportunity for a European continent that is still struggling to recover from the crisis. What is urgently needed in Europe is a comprehensive response to China’s new initiative, with the focus not only on the economy and trade, but also on the monetary and financial aspects of the Belt and Road, including discussion of the political and security implications of Beijing’s inroads into Europe and its neighbourhood.

Keywords:

• China
• Silk Road
• Europe
• investments
• infrastructure

Notes

¹ For an overview of the literature on OBOR, see Majumder, “One Belt, One Road”, and Callahan, “China’s ‘Asia Dream’”.

² Casarini, Is Europe to benefit; Cooley, New Silk Route; Godement et al., One Belt, One Road; Zhao, China's new Silk Road.

³ Amighini and Berkofsky, Xi’s policy gambles; Huang, “The new silk road initiative”.

⁴ Chaturvedy, New Maritime Silk Road; Godehardt, No end of history; Hilpert and Wacker, Geoökonomie trifft Geopolitik; Khan, “China goes west; Szczudlik-Tatar, China's new silk road diplomacy; Yong, “Offensive for defensive”.

⁵ Jin, “The ‘new silk road’”.

⁶ De Jonquières, Xi Jinping’s long road; Lin, China’s new silk road; Van der Putten and Meijnders, China, Europe; Schaefer, Shen and Loesekrug-Pietri, “Diplomatie mit neuen Mitteln”.

⁷ Chin and He, The Belt and Road Initiative.

⁸ Summers, “What exactly is ‘one belt, one road’?” and “China’s ‘New Silk Roads’”.

⁹ Fu and Lou, “Building the Maritime Silk Road”, 2.

¹⁰ Cohen, “China’s ‘second opening’”, 3.

¹¹ China’s National Development and Reform Commission, Vision and Actions.

¹² Ibid., 1.

¹³ Fukuyama, “Exporting the Chinese Model”.

¹⁴ On this point, see the last report by the World Bank on trade logistics in the global economy, Connecting to Compete 2016.

¹⁵ Ding, “Innovation on financing”.

¹⁶ Esteban and Otero-Iglesias, What are the prospects?

¹⁷ Swaine, “Chinese views and commentary”.

¹⁸ BDO, “One Belt One Road”. The South China Sea, encompassing an area from the Karimata and Malacca Straits to the Strait of Taiwan of around 3,500,000 square kilometres, is currently in the spotlight as territorial and maritime tensions steadily increase among riparian countries. China, Vietnam, the Philippines, Taiwan, Malaysia and Brunei all have competing claims. China has backed its expansive claims with island-building and naval patrols. The Obama administration has sent military ships and planes near disputed islands, calling them ‘freedom of navigation’ operations to ensure access to key shipping and air routes. The area’s importance largely results from one-third of the world’s shipping sailing through its waters and the fact that it is believed to hold huge oil and gas reserves beneath its seabed. No wonder the area is a priority target for China’s 21^st Century Maritime Silk Road.

¹⁹ Alam, “China-Pakistan Economic Corridor”.

²⁰ Zhang, Building the Silk Road.

²¹ Karimova, “Ukraine offers to use”.

²² Lin, “Erdogan’s neo-Ottoman vision”.

²³ Pavlićević, “China’s Railway Diplomacy”.

²⁴ Pavlićević, “China, the EU”.

²⁵ Van der Putten, Chinese Investment.

²⁶ Xing, “Li charms dock workers”.

²⁷ Franck, “La Suisse inaugure”, 18.

²⁸ China Global Investment Tracker, interactive map. http://www.heritage.org/research/projects/china-global-investment-tracker-interactive-map/china-global-investment-tracker-interactive-map.

²⁹ Casarini, “Chinese firms’ spending spree”.

³⁰ EU-China summit, Joint Statement.

³¹ Keynote speech by H.E. Li Keqiang at the 10th EU-China Business Summit, 29 June 2015 (translated). http://www.eu-china-business-summit.eu/content/uploads/2015/07/CHN-BS-sp290615-Translated-speech-of-H.E.-Premier-Li-Keqiang.pdf. See also Emmott and Taylor, “Exclusive: China to extend”.

³² Ministry of Foreign Affairs of PRC, “Li Keqiang Meets with Vice President”.

³³ For more details on renminbi trading hubs and the Renminbi Internationalisation Index (RII), a figure that describes the renminbi’s usage proportion in global trade, see Lau et al., Offshore Renminbi: Anchoring Confidence.

³⁴ Domanski, “China signs second-biggest swap”.

³⁵ Riecher and Black, “ECB Said to Weigh”. See also Casarini, China’s Financial Footprint.

³⁶ Kynge and Parker, “China set to choose London”, 1.

³⁷ Osborne and O’Neill, “It’s in Britain’s interest”. See also Byrne, Turning to Face the East.

³⁸ Bendini and Barone, Trade and economic relations.

³⁹ Casarini and Otero-Iglesias, “Europe’s Renminbi Romance”.