Chinese President Xi Jinping's imminent visit to Rome is already sparking tension in the West. At the center of this tension is Beijing's "Belt and Road" initiative – a terrestrial corridor along central Asia and a maritime corridor across the Indian Ocean and Africa. Given its economic and geographical dimensions, it is truly a giant project: It will require investments north of $1 trillion on railways, ports, roads, telecommunications and energy grids across 70 different countries. In the implementation of the infrastructures, connecting China to Europe, Italy stands at the crossroads.
Its intention of signing a Memorandum of Understanding (MoU) on the Belt and Road initiative has aroused suspicion in the European chancelleries. As for some other countries, the cooperation with China would be mainly related to ports, railways, airports, motorways and bridges, energy and telecommunications. Beijing has already invested 13.7 billion euros ($15.51 billion) in Italy, which is the third partner in Europe.
According to the Chinese government, in a context of economic slowdown more than 100 million investments would increase the job market by supporting the Italian debt and reducing the unemployment rate. Moreover, while Chinese products have been in the Italian market for a long time, the initiative could facilitate the penetration of the Italian firms into China and create opportunities for further collaboration in third countries. Indeed, staying out of the project would open for Rome the risk of marginalization in the global economy.
By pivoting on China, the economic cooperation area promoted by the Belt and Road initiative is planned to encompass 38 percent of the world's territory, 62 percent of the world population, 30 percent of global GDP, 24 percent of domestic consumption and 75 percent of global energy reserves. However, the criticism against Rome and its commercial policies did not take long: The German press has defined Italy as Beijing's Trojan horse within the EU. Although the EU is already China's largest trading partner, the increasing penetration of Chinese business in some economies and its related political influence is perceived as a risk to the European single market as well as to the values of the whole union. Accordingly, the European Commission has recently stated that in addition to being a partner, China has become a "systemic adversary who has different models of governance" rather than those commonly accepted internationally. Therefore, Europe has to "defend its own principles and values."
China plays a double game
The document is very explicit: "China plays the double game: Signing agreements oblige a fair and sustainable model of trade and governance, but it often has a different understanding and application of international law… It often applies a selective interpretation of rules by weakening the framework of rules that states and companies must respect." It suggests that Europe is called to defend itself: "China protects its national products from foreign investments through the selective opening of its markets and this may have negative repercussions on the whole world economy."
In other words, Chinese commercial practices are mainly based on asymmetries in the conditions for entering the respective markets, different procurement systems, entry barriers to the European companies and public subsidies to Chinese companies are concrete reasons for the EU to adopt stricter measures. This requires unity and a coordinated approach by all 27 European members. However, with its populist approach, the Italian government seems to be resolute in pursuing its own national interests.
Beijing's presence in Europe
China has already established its commercial presence in some European countries such as Greece, the Czech Republic, Hungary and Portugal. In 2008, the China Ocean Shipping Company (COSCO) acquired the Greek port of Piraeus, boosting its development and technological improvements. Nowadays, with a traffic increase of 300 percent Piraeus is one of the most important European maritime connectors and a focal point for the Western Balkan and Northern Europe route.
On the same pact are Czech Republic and Hungary, which have recently experienced a strong increase in their bilateral relations with China with important shareholdings in various sectors mainly related to infrastructure as the case of the Belgrade-Budapest railway project shows. Furthermore, in 2017 with a total amount of 186 billion euros, China was Germany's largest trading partner, followed by France, whose bilateral exchange was at 70 billion euros.
Between Great Britain and China, the investments are around $79 billion and London is one of the founders of the Asian Infrastructure Investment Bank (AIIB), created to finance Chinese infrastructure. In the last 10 years, China made 227 acquisitions in Great Britain, 225 in Germany, 89 in France and 85 in Italy. In the larger scheme, the main aim of the Chinese initiative is to replace the U.S. as a new global player and enter continental Europe through the Mediterranean.
In order to compete with Beijing's expansionist strategy, in 2018 Europe presented its own proposal, "Europe-Asia Connection – Essential elements for an EU," which aims to link Europe to China by involving 11 Eastern European and five Balkans countries interested in the EU enlargement process. On the other side, the U.S. warns of economic countermeasures. Security threats related to China's technological presence in the EU is already one of the main concerns of the U.S. administration. It urges European countries to keep Chinese telecommunication company Huawei out of any 5G project, as it could reportedly steal sensitive information and data from European and American databases.
Clearly, in keeping with its "America First" doctrine, the U.S. aims to protect its dominant influence in Europe, despite a real technological risk. As bilateral relations between Beijing and Washington are rapidly deteriorating due to the trade war started by U.S. President Donald Trump, opposition to the American hegemonic order is the glue of the consolidated partnership with Russia, aiming to move the pivot of the global economic structure towards the East. In other words, while the West is increasingly divided and some European national interests compete, China plays its alienation from Washington on a more assertive foreign policy, by offering an effective mercantilist variable for a new global balance of power.
* Assistant professor at the University of the Turkish Aeronautical Association, Ankara
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