Europe may hold new promise for BRI

On eve of its second Belt and Road Forum for International Cooperation (BRF), to be held in Beijing on April 25, China this Tuesday held its annual summit with the European Union. It is to be followed by its adjunct annual summit with 16 nations of Central and Eastern Europe (CEE) this Thursday and Friday. These two summits have at least temporarily deflected global attention away from China’s unending trade war with Washington.

Indeed, in the face of India earlier this week declining China’s invitation to participate in the BRF and the Donald Trump administration’s continuing vacillation on negotiating a trade deal with Beijing as also about its own participation in the BRF, Premier Li Keqiang’s week-long parleys with EU and CEE leaders are likely to embolden China to put up a brave front against the increasing number of countries questioning the BRI’s contours and credentials. More specifically, these will boost the Chinese diplomatic drive that has continued countering the ever-growing reportage about China creating “debt traps” for recipient countries.

This is where China’s front-loading of developed European nations becomes a potent tactic for the BRI, which was originally conceived for developing and least developed countries. It is also important to underline that it is not the US but the EU that remains China’s largest trading partner, with their two-way trade last year reaching US$650 billion – an impressive $1.8 billion a day. This figure can also be seen as being larger than China’s bilateral trade with both the United States and India combined.

The Brexit episode has also lately enhanced fissures within the EU, which has often failed to speak with one voice, something that has also given certain advantages to Beijing. 

It is against this backdrop that this China-EU Summit has ended with what some European leaders are calling a breakthrough trade agreement that promises their greater integration into the BRI. These claims become especially important given that only last month the European Commission was branding China as its “systemic rival” politically and as an “economic competitor” promoting unfair trade practices. Media commentaries were also agog reporting how the Trump administration had been pressuring EU leaders to ban Chinese high-tech giant Huawei for its alleged links with China’s Ministry of Public Security.

There were even reports that in the run-up to this 21st China-EU Summit in Brussels, European interlocutors had raised serious concerns and threatened not to sign the final communiqué. But most of these objections seem to have disappeared in face of the lure of China’s commercial deals

There were even reports that in the run-up to this 21st China-EU Summit in Brussels, European interlocutors had raised serious concerns and threatened not to sign the final communiqué. But most of these objections seem to have disappeared in face of the lure of China’s commercial deals. These incentives have now been camouflaged in the name of further fine-tuning China’s reforms and opening up to facilitate foreign investments while also addressing European concerns about China poaching foreign investors’ intellectual property.

So to propitiate detractors, the China-EU joint statement on Tuesday evening underlined their commitment that (a) “there should not be a forced transfer of technology,” (b) market access should be made “broader” and “non-discriminatory,” and (c) the strengthening of rules against state subsidies for industries.

Premier Li underlined how EU companies, including those 100% foreign owned, would enjoy “equal treatment” with local state-owned Chinese companies. This clearly has set the tone for his next China-CE summit in Croatia, which involves nations that have been closely connected to the BRI.

Given the size of their economies, the engagement of CEE nations with the BRI has not been widely publicized. Instead of European beneficiaries of the BRI, media focus has remained on China’s mega infrastructure projects across South and Southeast Asia and in African countries. In terms of their politics as well, having fiercely fought and ousted former communist regimes in some of these CEE nations, their post-communist leaders are not usually seen as natural partners of Beijing. But again, the BRI’s commercial lure has been fairly effective among these growth-seeking but infrastructure-starved newly liberalized countries. 

Indeed, this region was amply represented in China’s inaugural BRF in May 2017. This included four heads of state/government (from the Czech Republic, Poland, Hungary and Serbia) and a Romanian delegation led by the deputy prime minister. What makes this week’s China-CEE Summit promising is that 11 of these 16 CEE nations are members of the EU, and their deliberations in Brussels on Tuesday had already finalized several draft BRI deals that will be announced on Friday evening.

In fact, last month had already underlined this mood swing in Europe when Italy became first of the Group of Seven industrialized economies to join China’s BRI. Italy is now projected to become China’s gateway to the CEE. 

But all this has not put an end to contrarian voices that find China lacking in delivering on its promises, especially in terms of market reciprocity. There have been concerns about the detention of foreigners and internment campus in its Muslim-majority Xinjiang region.

French President Emmanuel Macron last month asserted how “China plays on our divisions” and urged that the “period of European naïveté is over,” yet sometimes such assertions are seen only as call for better commercial deals. President Xi Jinping’s visit to France last month that resulted in the two sides signing 15 agreements involving $45 billion worth of Chinese investments – including the purchase of 300 Airbus planes – made Macron’s assertions appear like a last-ditch effort before falling in line.

One could even say that this week’s 21st China-EU and ninth China-CEE summits have not only provided a positive spin to the upcoming BRF but even reinforced the political position of Premier Li. While attempts will continue to propitiate the Trump administration, whose reluctance, if not negation, to engage the BRI will have a direct bearing on US friends and allies – and how their media cover this jamboree – China’s BRI has clearly entered its next phase of shifting engagement to relatively advanced European countries.

This is part of China spreading its BRI far and wide with expanding engagements with European, Arab and African states while streamlining its existing partners in its immediate periphery. And, in spite of muting criticisms ranging from human rights to intellectual property, the truth is that as China shifts focus to European nations, more than a dozen of them have already signed up for partnerships with the BRI, which is likely to become the focus during the second BRF in Beijing.