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Europe stands to benefit from new Silk Roads

Fraser Mctaggart
Updated: Feb 18,2015 4:31 PM     China Daily

The European Union is following China’s initiatives to develop a Silk Road Economic Belt and a 21st Century Maritime Silk Road with considerable interest. The two projects have major geostrategic, political and economic implications that the EU (and the United States) cannot ignore.

During his visit to the EU in spring 2014 Chinese President Xi Jinping informed EU leaders about Beijing’s initiatives to deepen connectivity between East Asia and Europe via the New Silk Road (or the Silk Road Economic Belt) and the 21st Century Maritime Silk Road. EU leaders expressed interest in the initiatives. The final communiqué stated: “In view of the great potential to improve their transport relations, both sides decided to develop synergies between EU policies and China’s ‘Silk Road Economic Belt’ initiative and jointly explore common initiatives along these lines.”

In the intervening nine months Xi’s initiatives have developed rapidly with China announcing a number of major infrastructure projects to support the maritime road initiative. Beijing has said it plans to create a $16-billion fund to build and expand railways, roads and pipelines in Chinese provinces and autonomous regions that are part of the planned Silk Road Economic Belt.

China is also encouraging its State-owned enterprises and banks to support infrastructure development along the two routes. This is in addition to the substantial funds that it has already promised for its Silk Road partners. With the establishment of the Asian Infrastructure Investment Bank, even more money is likely to flow into the region to strengthen infrastructure capabilities.

The maritime road initiative appears to envisage a system of linked ports, infrastructure projects and special economic zones in Southeast Asia and the northern Indian Ocean. Perhaps of equal or even greater significance is the development of new production and distribution chains across the region, with China at its center.

The EU pays close attention to Chinese aid policy because it sometimes conflicts with its own development goals. The EU is also watching to see if and how China exploits the Belt and Road Initiative to increase its influence.

Sri Lanka may now be one of China’s closest strategic partners in the region. Since the end of Sri Lanka’s civil war there has been significant Chinese investment in the country. Colombo has been keen to cultivate Beijing as an economic partner to drive development. Sri Lanka has now cast itself as China’s primary partner in the maritime road initiative and seems ready to allow Chinese naval vessels privileged access to its port facilities.

China has also provided naval support for the EU-led anti-piracy campaign in the Gulf of Aden (Operation Atlanta). This is an important transit route for container traffic between Europe and China and a sign of Beijing’s willingness to share international responsibility for freedom of navigation on the high seas. Other potential choke points for Chinese trade are the Malacca Strait and the South China Sea.

Since the maritime road initiative involves many countries with which the EU has a partnership, it is clear that Brussels will follow developments closely to assess the likely positive and negative implications.

There could well be implications for trade relations and possibilities for joint activities. China is already discussing related infrastructure projects with Central and East European countries under the 16+1 format. There could also be problem areas not least in the different approaches of the EU and China to financial assistance to third countries.

But the message from the EU side is clear — a desire to work together with China wherever and whenever possible for mutual advantage.

The author is director of the EU-Asia Centre and senior adviser to European Policy Centre.