EU-China: A balanced investments screening mechanism is needed

Posted by economia 16/04/2019 0 Comment(s) Greek Business File,

As Europe hardens its stance against China-the new “systemic rival”, Professor Zhiqin Shi strikes back defending the BRI strategy and particularly the Chinese investments in Southern Europe and of course Greece

 

Greek Business File, No. 120, April - May - Interview by Lalela Chryssanthopoulou

 

Can you tell us a bit more about the Belt and Road Initiative, commonly referred to as the BRI?

 

Different schools of thought provide different defi nitions on the BRI. Geopoliticians argue that the BRI is China’s geopolitical response to Obama’s administration pivot to Asia. As the East was closed due to US’s naval preeminence and its ‘hub and spoke’ system of alliances, China could only look to the West and follow a Continental - Eurasian path. Economists will underline the domestic divergence between the rich coastal areas of China and its poor Western regions and argue that the BRI was mainly an initiative to redistribute resources from East to West and integrate the Western regions of China into the Eurasian economy while also exporting surplus production. A third view is that the BRI is a genuine eff ort of China to engage with the world and provide global public goods including funding for infrastructure and connectivity which really is a win-win scenario. While this view does not necessarily contradict the economists and the geopoliticians, it nonetheless showcases the positive sum potential of the BRI and the capacity of countries along the Belt and Road Initiative to benefit from it. Since its unveiling in 2013, the BRI has developed into a sweeping global project with profound implications for the international fi nancial system, China’s own growth model, and governance in China and in countries along the Belt. The cornerstone of President Xi Jinping’s eff ort to reposition China as a global economic leader, the BRI has the potential to deepen international integration and alter fi nancial standards and good governance practices.

 

The BRI is a strategy focusing mainly on trade development and logistics. Is there a particular role for Greece as the country is the main gateway to the European market?

 


Greece is a leader in the maritime transportation and the expertise of Greek ship owners is unmatched. Chinese and Greek maritime economies are highly complementary and the two sides have benefited from each other. Greek shipowners build their hardware in China and then transport Chinese goods to the world and goods from the world to China including essential energy resources. Since 2008, COSCO has invested in Piraeus port and the port has in less than 10 years developed from a provincial
outpost to one of the Mediterranean’s sea most important ports. What is necessary for Greece is to promote the complementary services around a port including legal, design and logistical services. For instance, Piraeus should also work on its potential as a center for arbitration in the BRI, advance its shipyards and upgrade its tourist services. To my knowledge, COSCO’s plan for the port includes support for most of those initiatives yet progress has been slow due to some regulatory complications. However I think it is upon the Greek side to accelerate the process and help Piraeus to acquire the position that it historically had as one of the region’ s most important ports. If you visit the national museum in Beijing, you will see photos of Piraeus shown at the exhibition dedicated to the BRI. China is very keen to make this project a model project for the BRI but it is also necessary for Greece to see the potential and engage.

 

What impact can this initiative have in the Balkans and Southern Europe in general?

 

There has have been criticism of China because it invests too much in Southern Europe and the Balkans. This is an oxymoron. If the EU had an interest in the region, it should have been the one to invest and promote its development. Unfortunately, since 2008, the EU has followed a policy of fi scal austerity and the upgrade of its infrastructures is not a priority. China has worked with regional governments and provided funding to infrastructure projects. From the port of Piraeus to the Belgrade - Budapest port to greenfield investments in Bulgaria and Serbia. In Serbia for instance, HBIS Group, China’s largest steel and iron producer (and the world’s second- largest) supported the revival of a Serbian steel company (namely Smederevo steel factory) with very clear benefits to the society. To be sure, Chinese investments are not a panacea for the deficit of European investments and cannot fix the structural issues of EU’s fiscal governance. The region however can truly reap signifi cant benefits from better infrastructure and an increase in connectivity and the BRI promotes both goals. Greece is, of course, naturally located as the entry point and it should double down on the quality of logistic services it could provide. If Singapore - an island of 5 million people which is surrounded by massive (and not so friendly to Singapore) countries - managed to become the world’s most advanced logistic services provider, then why not Greece? Greece is an entry to the world’s largest market (the European market) and it is the natural
gateway. I think Greeks need to innovate and engage with the world. To my knowledge, Greek businessmen used to be extremely entrepreneurial across the Mediterranean with fl ourishing communities in Asia Minor, Egypt and the shores of Southern Europe.

 

Italy recently announced its decision to join the BRI. What is the significance of this move?

 

Italy is a founding member of the European Union, a G8 country and one of the world’s top fi ve industrial powers. It also has deep historical connections with China as many Italian Jesuits reached China as early as the Ming dynasty. Italy’s participation in the BRI would be a signifi cant signal that countries in Europe understand the potential of the Initiative and foresee the benefits they could reap from it. In fact, four years ago the UK was the fi rst big EU state (following Luxembourg) to have joined the Asian Infrastructure Investment Bank (AIIB), defying US calls to boycott it. I think it is very important that European states engage with China economically and promote Eurasian integration.

 

Some European countries, notably France and Germany, have expressed some skepticism about some of China’s initiatives directly related to the BRI, such as the acquisition of stakes in strategic infrastructure assets in Europe. What is your answer to that?

 

I think it is certainly necessary for the EU to create a mechanism to screen investments as both the US and China do. However, this mechanism should be balanced and fair. First, it should not turn Europe into a fortress and close the European market and second, it should respect the interests of the member states. For instance, many in Brussels and some northern countries have criticized Greece because of COSCO’s investment in Piraeus but this is a project that has delivered very real benefi ts to Piraeus
and the country without really damaging the EU. Would the project be allowed under an EU - Brussels operated investmentscreening mechanism? I think these are important questions that need to be answered before the setting up of any such mechanism. Otherwise, this could greatly infl ate the centrifugal forces in the EU.

 


*We would like to thank Vassilis Trigkas, Onassis Scholar and Fellow, Belt & Road Strategy Center, Tsinghua University, for his assistance in this interview

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