European versus American Perspectives on the Belt and Road Initiative

• Author: Nicolas Véron,Madi Sarsenbayev
• DOI: http://doi.org/10.1111/cwe.12322
• Published date: 01 March 2020
• Date: 01 March 2020

©Peterson Institute for International Economics, reproduced by permission from PIIE

China & World Economy / 84–112, Vol. 28, No. 2, 2020

84

*Madi Sarsenbayev, Eranda Rothschild Foundation Junior Fellow, Peterson Institute for International

Economics, USA. Email: msarsenbayev@piie.com; Nicolas Véron, Senior Fellow, Peterson Institute for

International Economics, USA. Email: nveron@piie.com. A version of this paper was presented at the 8th

annual CF40-PIIE Economists Symposium held in Beijing on 11 May 2019.

European versus American Perspectives

on the Belt and Road Initiative

Madi Sarsenbayev, Nicolas Véron*

Abstract

China has started to deploy its Belt and Road Initiative (BRI) in the European Union

(EU), and the EU in turn has regional and global interests that intersect with the BRI’s

scope. Subject to future adjustments of China’s BRI strategy, the initiative’s potential

contribution to the EU requirements for infrastructure development could be signicant,

even though its modalities in the EU are inevitably different from those in countries

that are poorer or have more difficult financial market access. The EU’s attitude to

the BRI, however, has not yet fully coalesced. Despite supercial similarities in public

discourses, the EU has a profoundly distinct perspective from that of the US on the

BRI, and more generally on the rise of China and its growing global inuence. For the

EU, the BRI generates challenges but also potential benets. The EU should improve

its ability to welcome sensible BRI projects, including through the adoption of greater

reform of screening frameworks for foreign direct investment. More generally, the EU

should enhance its ability to define policies independent of the US on China and the

challenges resulting from China’s rise. China should also make further efforts to foster a

constructive relationship with the EU.

Key words: Belt and Road Initiative, European Union, infrastructure investment,

multiannual nancial framework

JEL codes: F1, F2, F5, F6

Debate over the Belt and Road Initiative (BRI) in both China and the US often assumes

a polarity between China and “the West,” with some analysts mistakenly believing

that the West is essentially synonymous with the US and its interests and strategy. The

reality, of course, is more complex. This paper focuses on the largest non-US component

of the West, the European Union (EU), and how it relates to the BRI. Section I describes

the BRI as it has been implemented so far, both in general and specically in the EU.

©Peterson Institute for International Economics, reproduced by permission from PIIE

European versus American Perspectives on the BRI 85

Section II analyzes the economic case for BRI projects and investments in the EU.

Section III assesses strategic considerations for the EU and its member states. Section

IV concludes with recommendations to the EU and others.

I. The Belt and Road Initiative and the European Union

1. The Belt and Road Initiative at a Glance

The BRI is a cooperation framework first articulated by President Xi Jinping during

visits to Kazakhstan and Indonesia in September and October 2013, respectively

(MFAPRC, 2013). It aims to promote connectivity, policy coordination and development

on a transcontinental scale. Its formulation and substance have evolved over the years.

In its early phase, it was referred to in English as “One Belt, One Road,” explained

as consisting of a (continental) Silk Road Economic Belt connecting China to Europe

through Central Asia and Turkey, and a seaborne 21st Century Maritime Silk Road,

adding sea routes to Southeast and South Asia and East Africa. The scope was later

broadened, with less specific emphasis on one belt or road and the corresponding

rebranding (in English) as BRI from 2015 on, although the Chinese expression remains

unchanged.

The denition of the BRI is highly exible, and its geographical boundaries have

expanded over the years. The Chinese government does not appear to release BRI-

related data in a systematic or time consistent manner, leaving specifica tion and

quantitative analysis to others. Along with overhauling hard and soft infrastructure

to enable higher trade flows, other goals referred to by Chinese officials under

the BRI umbrella include developing various industries to facilitate financial

integration, promoting people-to-people exchanges and building a digital Silk

Road (NDRC et al., 2015; The Economist, 2018). In line with many other analysts,

this paper envisages the BRI as mostly focused on “hard” infrastructure investment

(especially in transportation and energy), which does not include agriculture, real-

estate, tourism, manufacturing or telecommunications investment, such as fifth-

generation networks, in its scope.

The geographical scope of the initiative is also not precisely defined and has

expanded from its initial Eurasian focus to Africa and then all the way to Oceania and

the Americas. The list of participating countries is correspondingly elastic. In an April

2019 report, the Ofce of the Leading Group for Promoting the Belt and Road Initiative,

an organ of the Communist Party of China (CPC), stated that 125 countries had signed

up for the BRI (OLGPBRI, 2019). In its reference study of BRI economics, the World

Bank (2019) identified 70 BRI corridor economies (situated along the BRI transport