Last week, European Union foreign ministers approved plans to develop a rival global investment strategy to China’s Belt and Road Initiative, in order to counter Beijing’s growing influence in countries across the world.
Waking up too late
Beijing, which launched the Belt and Road Initiative in 2013, has now invested in about 70 countries and international organizations. In the EU member states, such as the Greek port of Piraeus, as well as Italy, it has made investment since it is aware of the importance of the Mediterranean Sea for transport and infrastructure projects.
Foreign ministers of 27 European countries have approved new incentives to advance the "Global Connect Initiative" and agreed to increase, from next year, their pressures for investment in the initiative to deepen European-global bonds.
Josep Borrel, the EU foreign affairs chief, said at a press conference after the meeting that this issue has a "broader purpose that puts communication at the center of our foreign policy."
He said that the EU launched this process two years ago following an agreement with Japan.
"It seems that this issue is much more important for us at the moment to take a broader look at the problems of relations with the Middle East and look at Central Asia and China, but not in the same way and with the same goals as China with the Belt and Road Initiative," Borrel said.
Alicia Garcia-Herrero, a Asia-Pacific chief economist and a senior research fellow at Brussels-based think tank Bruegel, recommends that the EU should take the necessary precautions in its overdependence on China in terms of trade and infrastructure so that if a supply chain suffers shocks, they would not be left in dire straits. "Better communications means diversifying the value chains and cutting the strategic dependence for the EU and its partners," said Garcia-Herrero.
European lavishness
Recently, EU announced plans for financial aids to some countries. President of the European Council Charles Michel on Sunday pledged a hefty aid package to Armenia.
" We are by your side and we reaffirm the EU’s readiness to be a constructive partner in solving problematic issues and promoting democratic values. The EU is ready to assist Armenia in its key priorities – infrastructures, digital agenda, climate, transport, democratic reforms. The EU wants to strengthen ties with the countries of the region and carry out work to prepare for the Eastern Partnership summit," said Michel.
Similar financial promises were also made to Georgia and other regional states. What is clear he is the European strategy to grab China partners, but whether or not the Europeans can tackle China in terms of trade and attracting foreign partners is a serious question.
China's exceeding investment abroad
The EU struggle to take on China in trade, investment, and partner attraction is very belated and likely fruitless. At present, China's foreign direct investment in the countries that participated in the ambitious Belt and Road Initiative continues to grow, increasing by 13.8 percent in the first five months of this year compared to last year to reach $7.43 billion.
According to official data, China's foreign investment in the information production and transmission sector is grow nonstop. The manufacturing sector attracted $7.2 billion in the first five months of this year, up 11.8 percent compared to last year.
According to the Chinese Ministry of Commerce, direct investment by Chinese companies reached $32.75 billion this year, up 3.8 percent compared to 2020 and accounting for more than 75 percent of total foreign direct investment during the period. According to the report, the $10,000-trillion Belt and Road Initiative, also called New Silk Road, will serve strengthened cooperation among East Asia, Europe, and East Africa. The total trade turnover between China and the member countries of the Belt and Road Initiative from 2013 to 2020 reached $9.2 trillion, as during this time the total investment of Chinese companies in these countries reached $136 billion.
China successful in attracting foreign investment
When coronavirus hit and left dire economic influence on Europe and the US, the investment flow to the Western countries slowed down and China unseated the US as top foreign investment destination as Beijing fast contained the pandemic and started economic recovery. The amount of the Chinese investments in 2020 bear witness to Beijing’s voyage to become a world economic powerhouse, while the position has long been held by the US. The position shift was accelerated under coronavirus, with China shoring up its share from global trade. China Investment Corporation reports that the turnover of the Chinese government bonds traded by foreign investors hit ¥3.22 (over half a trillion US dollar), up $10 billion compared to the same time last month. Analysts say the stronger yuan in recent months and growing demand for Chinese goods around the world have been among the main reasons for rising demand for Chinese securities. China is now the second largest securities market in the world after the US.
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