EUROPEUM Institute for European Policy

On the 14th and 15th of May 2017, Beijing will host an international summit that will gather leaders of 28 countries from Asia, Europe and Africa. The topic of this summit is China’s latest economic diplomacy strategy dubbed ‘The New Silk Road.’

The Silk Road was a network of merchant routes linking China with Center and South Asia, Balkan and the Mediterranean since 130 BC up until its closing in 1453 CE. Apart from transporting goods, it also became a conduit for cultural, linguistic and religious exchange. In 2013, Xi Jinping decided to revive this historic project once again by introducing the One Belt, One Road – or for short the Belt Road Initiative (OBOR or BRI) – a new Chinese economic diplomacy approach, which aspires to interconnect 71 Eurasian countries through railways, roads and ports. The OBOR has two parts: Silk Road Economic Belt, going through center of the continent, and the Maritime Silk Road, connecting southern countries by sea.

China hopes that the infrastructure network will help boost its slowly decelerating economy. In contrast with developed ports and important highway crossroads, Central China is fighting with poverty and serious lack of infrastructure. Additionally, China struggles with its own past, as a once heavily export-oriented economy is now facing a drop in exports whilst being reinvented by the 13th Five-Year Plan. Constructing a new Silk Road would supposedly solve these problems by boosting exports and opening new markets for Chinese goods – all while helping to upgrade and engage the economically undeveloped Central China.

Since the launch in 2013, China has by this March already poured approximately 50 billion dollars into constructing vast infrastructure links (as per the official Chinese press Xinhua agency), the latest of them being a January-opened railroad connecting China with the United Kingdom. It is now the world’s second longest railroad, with a length of over 12,000 km. Apart from railroads and highways, China also plans to build new oil and gas pipelines, Internet networks and power grids.

So far, the United Kingdom is not the only European country accepting the enhanced cooperation from China. Both France and Italy have officially expressed their interest in deepening mutual trade in February this year, as well as the willingness to collaborate on projects regarding other sectors, like nuclear energy, science and space exploration. German enterprises have welcomed the opportunities connected with widening railroad infrastructure and upgrading ports like Hamburg or Duisburg.

It is important for China to gain support of the core European countries, who can influence the general response to OBOR throughout the EU – but even if companies seem ready to jump at the opportunities and most of the governments happy to accept cooperation, some media across Europe still depict OBOR as either a future threat to our sovereignties, or a project too big and risky to ever be successful.

They might have a reason to worry; In the Chinese governments’ own words, this project was partly means of putting to use tons of surplus cement and steel, which brings forward suspicions that the project might favor Chinese companies at the expense of foreign ones. This triggers some insecurities about whether tender laws are going to be followed, after countries agree to provide their cooperation, lands, companies or resources. Another big question lies in the financing of this grandiose scheme. With the mentioned slow-down of economy and many other long-term plans to accomplish (like the high goals of China’s 13th five-year plan), China needs this project to become a success. In 2016, the Asia Infrastructure Investment Bank was created, and has since funded some OBOR projects mainly in Middle East and Central-West Asia. Another source of income might come from the Chinese New Development Bank, along with the U.S. based Silk Road Fund, which seems to be ready to give out the estimate of 40 billion dollars.

Current maps have the Belt Road starting in Central China city Xi’an and making its way to the Kazakhstan border. Turning southwest through Iran, Iraq, Syria and Turkey before reaching Europe – making a U-turn for Moscow – and then back north through Bulgaria, Romania, Polonia, Germany and Rotterdam. On the way back south, the Road will join its maritime equivalent near Venice.

Even though it now looks like the closest OBOR city to Czech Republic is going to be Polish Lodz, the early drafted map had the Road also passing through North Bohemia. Though there is no evidence that the previous plan would be back on table just yet, as one of the enthusiasts among the 16+1 group of Central and Eastern Europe states, Czech representatives are working hard to ensure that the Czech Republic will be incorporated in the future. During his visit to Prague last March, Presidents Xi and Zeman also touched up on the project of a new ‘Y-shaped corridor’ connecting the three rivers Danube-Oder-Elbe and shortening the road between Black and Baltic and North Seas. They agreed on ‘strategic partnership’ of both countries, that, even though for now not genuinely connected to OBOR, would still have Czech investors engaging in this, as well as many other Chinese projects.

The Beijing summit this month is intended to draw media attention and international support, but so far, it has only garnered mixed responses. Only 28 countries representatives are expected to be present, amongst them Vladimir Putin as the only representative from the BRICS countries. India is (justifiably so, given both countries’ history of territorial disputes) worried about the real intentions behind promised $45 billion economic corridor through Pakistan coming with a large port complex, which might, as some remark, also very easily turn into Chinese naval base.

China’s other historical rival, Japan, has on the contrary agreed to send Prime Minister Abe’s right hand to the summit, as means of strengthening diplomatic ties. However, the U.S., as well as most of Europe’s leaders, are skipping out. The only European (and G7 alike) representative is going to be Italy. Some commentators suggest that Europe’s string of national elections is not the only reason, with the Commission recently challenging China’s Budapest – Belgrade railroad plans for breaking European tender laws. Furthermore, since some experts do not exclude the possibility this Chinese initiative might result in creating small, regional economic and free trade zones along the way, the regulative environment of European Union might pose even a bigger problem in the future.

The New Silk Road is a grandiose yet a risky project for the many countries it potentially involves. On the other hand, it might not only reinvigorate Chinese economy, but also strengthen Europe-Asian ties, provide a network of travel and trade infrastructure and many economic opportunities for developing countries. On the outside, it might seem like a very beneficial project – for China certainly, that much is clear. However, the key question countries ask first, is “What’s in it for us?” To gain international approval, China must first prepare to disperse the mist still surrounding the questions of cooperation and transparency, as well as financial viability of the whole project. After all, letting a foreign investor remodel and influence our backyards, particularly when the investor is such a powerful country, is not a thing to be agreed on without careful planning or considerations.

Hanka Burešová

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