Why Europe and the US cannot afford to ignore China’s belt and road
Michael Clauss says Europe must dial in to the China-led infrastructure project, given its massive scope and impact, and seek to bring to the table as an added draw its trademark focus on local content and transparency
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 US$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.
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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?
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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.
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