German ambassador to China: Europe and US cannot afford to ignore China's 'belt and road' – Business Insider

A map illustrating China's silk road economic belt and the 21st century maritime silk road, or the so-called Thomson

China’s “Belt and Road Initiative” is gathering momentum.
Enthusiasm for the promise of vast infrastructure projects,
investment and more “connectivity” is great, but it seems to cool
closer to the most developed parts of Europe and the US.

The initiative is supported by $3 trillion of foreign
currency reserves and state-owned enterprises. The new Silk Road
also reflects geopolitical ambitions; it shows how the Chinese
leadership wants to shape the order of an area that represents
more than half the world.

The initiative has gained additional momentum from the
dwindling of US influence in East Asia, after America’s
withdrawal from the Trans-Pacific Partnership. Thus, to underestimate the importance of the belt and road
would be a strategic mistake.

Not surprisingly, a project of this scale and ambition raises
questions: do the highly indebted Chinese state and overleveraged
SOEs really have the financial firepower to sustain this project?
Are the terms really attractive and transparent enough for
foreign companies? Can local populations be convinced that these
projects are in their interest, despite in many cases having
minor local input?

Can China allay suspicions that, besides pouring concrete onto
roads and into ports, the initiative might also mean very
concrete political influence? Attempts by European delegates at
the Belt and Road Forum in May to raise these concerns
and offer ideas for solutions have yet to be addressed.

ChinaREUTERS/China Daily

And yet, the belt and road is too important to be ignored
by Europe, or the US. The basic idea behind it is completely
convincing: Central Asia, the Middle East and sub-Saharan Africa
need investments in infrastructure on a massive scale, in order
to jump-start economic development and increase political
stability, while a Europe facing a refugee crisis of historic
proportions can’t afford to ignore a scheme that could be crucial
in tackling its root causes.

The belt and road is not just happening “out there”, it
aims at Europe’s periphery. Infrastructure in parts of Europe
needs urgent upgrading, but China’s preference for exclusive and
confidential bilateral deals poses a serious challenge to EU
standards, for example on public tenders. This is a challenge for
all countries along the Silk Road, and at its other end in
Europe. Without stronger respect for WTO procurement rules, the
initiative risks becoming a vehicle for more protectionism, with
SOEs as gatekeepers in third markets, and only foreign firms
willing to accept preset conditions – such as forced technology
transfer – being let in.

The belt and road plan is further proof that China intends to
stick to and expand globalization. This is a positive development
for both China and Europe.

china shanghai brokerage tradersREUTERS/Aly

However, it is not quite the globalization we are used to. For
Europe, globalization is open, market-oriented, based on and
enforced by treaties equally applicable and negotiated by all,
ensuring the free flow of goods and services, information and

What would globalization with Chinese characteristics mean? A
system where all roads lead to Beijing? Where informal new
formats, with all outcomes orchestrated by China, sidestep formal
negotiated treaties? Where economic favors are granted by
informal bilateral arrangements, to be withdrawn in case of a
hiccup in bilateral ties?

I suggest two ways to deal with China’s Silk Road ambitions. One,
partner with China to close development gaps, while reinforcing
the open, transparent and non-hierarchical world order, as seems
to be working with the AIIB.

Two, Europe could offer its own concept to act as another
friendly pole with the power to attract. Local content – that is,
maximum participation by local labor, local companies and local
products – could be the signature of connectivity,
European-style. Open tenders where the best offer wins, hopefully
through a bid from the country where the project is built, would
be another. Labour safety, environmental standards and fair and
sustainable financing would be a third.

Like China, we need a narrative that is highly attractive across
political, ideological and cultural divides.

Michael Clauss is the German ambassador to China.

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