The European Union and China's Belt and Road

Impact, Engagement and Competition

Vassilis Ntousas, Stephen Minas, Vassilis Ntousas, Stephen Minas

• Publisher: Routledge
• Year: 2021
• ISBN:
  9781000416114
• Edition: 1
• Topic: Politique et relations internationales
• Subtopic: Politique asiatique

This book explores key elements of European Union (EU) engagement with the Belt Road Initiative (BRI), drawing on the expertise of leading practitioners and scholars of EU-China relations.

Under the theme of discerning the BRI and its nexus with the EU, chapters examine the nature of the BRI as China's approach to global governance and consider how BRI intersects with the EU as a very different regional integration project. Under the theme of BRI factors in EU law and policy, chapters examine the BRI as a factor in specific domains of EU law and policy, including investment, finance, the environment and the COVID-19 pandemic and consider EU responses. Under the theme of EU Member State experiences, chapters present a series of case studies of individual Member States, their engagement with the BRI and ongoing policy debates.

This book will be of interest to scholars and students of International Relations, EU external relations, Chinese public policy and foreign relations, European studies and security studies as well as policymakers dealing with China in EU and Member State institutions.

Part I

Introduction

1 Introduction: Facing the Belt and Road from the European Union

Vassilis Ntousas and Stephen Minas

Decades of rapid economic growth in China have transformed the global economy and are also bringing political consequences, as a wealthier China becomes more assertive. Since 2013, under President Xi Jinping, China has expanded its investment, trade and political relationships under the rubric of the Belt and Road Initiative (BRI). For the European Union, the BRI has over time raised profound questions concerning the bloc’s relationship with China. These include the environmental and social impacts of Chinese investments in the EU, the ability of the EU to speak with one voice and act in unison concerning Beijing and competition to influence economic and political developments in broader Eurasia and globally. Concurrently, however, a number of EU Member States have welcomed BRI-related investments, while some take the view that the BRI may encompass new opportunities for EU-China cooperation on issues of common concern. Historically, the EU has not taken an overall strategic approach to relations with China. Given that the EU has long viewed China primarily as a trading and economic partner, the BRI requires getting to grips with broader elements of large power relations.

The contested characterisations of the BRI as opportunity, challenge and threat, and the different perceptions and interests of various EU institutions and Member States, have driven diverging policy responses. The long-standing willingness of a number of EU members to upgrade bilateral relationships with China to reap financial and other benefits at times translated into an open stance based on positive appraisals of the BRI. This was more pronounced in southern Europe, partly because of the need for economic support in face of the eurozone crisis. Regardless of the country specifics, however, the early years of the BRI were characterised by efforts to vie for (in)direct Chinese support at Member State level. This made the crystallisation of a unified EU approach vis-à-vis the initiative a difficult undertaking.

As BRI gradually morphed into a more concrete initiative and its terms and contours became more visible, the approaches of Member States became more balanced. This allowed the EU to make some progress towards a more united stance. This, however, has not negated the continuing importance attached by certain Member States, such as Portugal, to attracting Chinese investments, even beyond the parameters of the ‘strategic’ approach newly favoured in Brussels.

In March 2019, the European Commission signalled a shift in its approach, describing China as ‘simultaneously, in different policy areas, a cooperation partner with whom the EU has closely aligned objectives, a negotiating partner with whom the EU needs to find a balance of interests, an economic competitor in the pursuit of technological leadership, and a systemic rival promoting alternative models of governance’ (European Commission 2019, 1). Although criticising China’s widespread outbound financing of fossil-fuel projects (by far the largest component of Chinese outbound energy financing: Brown University 2020), the Commission declined to address the BRI directly (European Commission 2019, 3). This formulation, since adopted by the new Commission (von der Leyen 2020), was an important intervention in the EU debate on relations with China. Nonetheless, it can hardly be perceived as the final word, not least due to ongoing Member State differentiation in approaching this ‘partner, competitor, rival’ schema and the concomitant need for the Commission to clarify how its approach can be implemented.

The complexity of framing a response to the BRI is not solely due to the EU’s sui generis nature and intricate decision-making processes. The EU faces a changing Belt and Road, emanating from a changing China. The years since Xi announced the BRI have seen arguably the most consequential changes in China’s internal politics and international stance since the fall of the ‘Gang of Four’ and the pivot to ‘reform and opening up’ under Deng Xiaoping. These changes have included Xi’s consolidation of personal power, ending decades of ‘collective leadership’ and symbolised by the 2017 abolition of presidential term limits. The leadership role of the Chinese Communist Party (CCP) has been reasserted over government and economy. Under Xi, China simultaneously presents itself as a champion of multilateral cooperation and vigorously pursues its (increasingly broadly defined) ‘core interests’. The BRI, endorsed in the Party constitution since 2017, is a key instrument for achieving China’s national aims as defined by its president.

But what is the Belt and Road? Since 2013, it has been variously explained as China’s approach to global governance; Chinese grand strategy; the external dimension of Xi’s ‘China Dream’; an economic plan for exporting Chinese excess capacity and low–value-added activities; and a slogan applied indiscriminately to multiple disconnected projects. Debate continues over the BRI’s nature, and this volume will demonstrate that EU perceptions of it have changed considerably in a few short years. While in 2017 an EU official might have still thought ‘[i]t’s about selling their stuff’ (quoted in Frankopan 2018, 120), the increasingly dominant view in EU policy circles in the last few years is that BRI is not just, or even primarily, a commercial project. Gone, too, is the implausible notion that the EU could perform a ‘scrutinizing role’ in the BRI (another EU official, quoted in Maçães 2018, 145). The BRI is better understood as ‘a vector for generally internationalizing Chinese priorities’ (Ekman 2019, 24), and indeed as ‘China’s global development policy’ (Maçães 2018, 78). The BRI’s scale and complexities challenge the EU to develop sophisticated responses.

Much is at stake. Through the BRI, China is competing to set the standards of global economic activity — a field in which the EU has long excelled, often in partnership with the United States and other democracies. Such competition entails not just an economic contest for technology leadership, third-party markets and global value chains, but also normative choices. Many BRI projects have sharply diverged from EU values concerning environmental sustainability, social standards and labour rights. These divergences have been identified in BRI projects in the EU’s near-abroad and even in some Member States, testing EU unity and its ability to consolidate the European space through shared norms. More broadly, the BRI has served as a factor in the constantly developing terms of the overall EU-China relationship. The prospects for an improved and more reciprocal economic relationship, and for enhanced cooperation on mutual priorities such as climate change, are at stake.

Compounding these complexities, EU-China relations are developing in the context of multiple crises: the Brexit crisis, which brought a sustained and coherent response from the EU; the crisis of great power relations, with the Sino-US ‘trade war’ feeding generalised confrontation and hostility; the COVID-19 pandemic, which has both jolted EU-China relations and put much of conventional diplomacy on hold; and the ever-worsening crisis of climate change, amongst many.

This book makes a targeted intervention in the vast policy and academic debate concerning BRI. Already, the BRI has spawned a voluminous literature. Multiple monographs (e.g. Rolland 2017; Maçães 2018; Drache, Kingsmith and Qi 2019) and edited volumes (e.g. Zhang, Alon and Lattemann 2018; Leandro and Duarte 2020) have sought to answer the riddle of the BRI. Other studies have approached the BRI from particular academic perspectives, from normative readings (Shan, Nuotio and Zhang 2018) to the perspectives of international law and global governance (Zhao 2018). There is also a growing number of publications that suggest BRI policy changes or law reform, such as Wang, Lee and Leung’s (2020) proposals for a new BRI dispute settlement system. Publications concerning Europe and the BRI have tended to focus on the tensions between economic and national security concerns in shaping EU responses to the BRI (e.g. Van der Putten et al. 2016; Le Corre 2018). Chinese state think-tanks have also published research on the EU-BRI nexus, some of which is available in English (see, e.g. Liu 2017, identifying the EU as ‘the very focus of’ the BRI).

Despite this proliferation of publications, no previous book has explicitly focused on examining BRI for an audience of EU policymakers, scholars and students, with chapters dedicated to the key considerations, from EU perspectives, of the BRI. This volume addresses that gap in the literature. Our book does not attempt to describe the ‘whole elephant’ of the BRI. Rather, chapters focus on different moving objects in the ‘BRI kaleidoscope’ (borrowing Snyder’s metaphor, Chapter 4) that are particularly salient to Sino-EU relations.

This book explores key elements of EU engagement with the BRI by drawing on the expertise of leading practitioners and scholars of EU-China relations. The EU is the main geographic focus. Some chapters also discuss the EU’s near-abroad of the Western Balkans, regarding the interface of BRI and EU priorities. Finally, elements of the book address the entirety of the BRI, in order to introduce the BRI and appraise its significance to the EU.

To assess the BRI’s significance to the EU, we assembled a group of both Europe- and China-based scholars and practitioners, from disciplines including law, economics, international relations and political science. Authors were asked to address a set of interrelated questions: What have been the respective roles of EU institutions and Member States concerning the BRI, and what is the prospect for a unified position? How can the EU utilise law, regulation and standards to respond to BRI and protect EU interests? How can the EU manage risks presented by the BRI? Is there potential for EU engagement in the BRI to contribute to positive Sino-EU cooperation on shared priorities?

The book is structured as follows. Section 2 examines the nature of the BRI as China’s approach to global governance, and considers how BRI intersects with the EU as a very different regional integration project. Section 3 examines the BRI as a factor in specific domains of EU law and policy and considers EU responses. Eschewing any attempt to be comprehensive, chapters focus on important policy areas of financial and economic relations, the environment and health. Section 4 presents a series of case studies of individual Member States, their engagement with the BRI and ongoing policy debates. The conclusion summarises the book’s contribution and distils key messages for the EU’s future approach to the BRI.

Section 2: Discerning the BRI and its crossroads with the European Union

Zhao and Chen present the Belt and Road as China’s approach to global governance, which the authors contend is a ‘development strategy with its origin from China’s reform and opening up policy’, building on existing bilateral, regional and multilateral cooperation mechanisms. The BRI profoundly affects China-EU relations while, at the same time, the EU will have a ‘significant impact’ on the BRI. Zhao and Chen acknowledge different Member State perspectives on the BRI and make suggestions for improving cooperation on a ‘reciprocal and rules-based basis’.

Men tracks the BRI as a factor in China-EU diplomacy, situating the initially positive EU response to the BRI in the aftermath of the eurozone crisis, when both the Juncker Commission and Member States looked to attract investment to support economic recovery. However, EU institutions soon adopted a more sceptical stance, a change which Men attributes to growing awareness of the different standards promoted through the BRI, the ‘Made in China 2025’ industrial policy and concerns over Chinese acquisition of ‘cutting-edge’ European technologies. Men concludes that a united approach to China continues to elude the EU.

The BRI challenges the EU in the domain of law as well as diplomacy. Snyder observes that the EU is constrained in developing a general approach to the BRI because relevant legal competences are divided, and shared, between the EU and Member States. However, Snyder also locates in the EU’s ‘legal pluralism’ the potential for the EU to pursue its own interests in the BRI. EU law, national law and European ‘soft law’ can all be utilised to promote EU norms in the BRI. Importantly, Snyder notes that these legal processes are not limited to governments, with the private sector an important driver of policies and norms.

Blockmans and Hu analyse legal considerations from another perspective, in their discussion of the EU’s legal bulwarks and regulatory responses to address concerns about economic and national security triggered by BRI investments. They suggest that, while a more realistic and assertive EU approach toward Chinese market behaviour is welcome...