President Xi Jinping’s mammoth project to improve trade connections along the ancient Silk Road between China & Europe has funding problems. Nonetheless, Beijing continues to offer only crumbs for non-Chinese Firms.
More and more Europeans are growing disillusioned about the BRI and irritated by China’s diplomacy.
Combined trade between China and European countries involved in the New Silk Road project increased 8% in 2019, the Chinese Ministry of Commerce emphatically said in a recent Press Conference.
However, the leaders in Beijing were careful to avoid saying that the Belt & Road Initiative (BRI) is struggling to find new investors.
In a paper released on January 17, it was reported the BRI presented an evident opportunity for European businesses. The biggest organisation representing European companies argues that while the Chinese seem ready to lend huge sums for Belt & Road Projects, the funding requirements of infrastructure initiatives across Eurasia far exceed their financing capacities.
According to the China Global Investment Tracker, China’s BRI related investment was worth $ 730 billion between 2013 and 2019.
The Beijing government said on January 22 that the cumulative investment of Chinese companies in countries linked to the BRI stood at some 106 billion yuan (US$ 16 billion) in 2019, roughly on par with 2018 figures.
European companies have shown interest in the BRI since its inception, but their level of participation is still limited and confined mostly to “niche” contributions as subcontractors. They are dwarfed by their Chinese counterparts, which get the biggest share of the cake, the EU Chamber of Commerce in China said in a report published on January 16.
But the most disappointing aspect of the Belt & Road Scheme, at least for those in Europe who have bet big on China’s financial largesse to prop up their faltering economies, is that the flow of Chinese money is slowing.
Chinese investment in Europe reached US$ 20 billion in 2019, fewer than half of the amount it had been the previous year. Transport development, which is at the core of the BRI, was especially hit by this decline.
Czech President Milos Zeman, until recently a staunch supporter of the BRI, has accused Beijing of not delivering on its investment promises. The Czech Republic is member of the 17+1, an informal grouping that brings together China and 17 eastern, central and southern European countries.
The Berlin based Mercator Institute for China Studies notes that Chinese investment is focused on Western and Northern Europe. For example, Eastern Europe accounts only for 1.5 percent of all China’s investment in the European Union.
With a few exceptions, people around Europe have an unfavourable opinion of China and its paramount leader, the Pew Research Center wrote on December 5, 2019. Growing scepticism over the benefits of the BRI explains only partially why the Europeans do not trust China.
The EU has often lambasted China for its unfair commercial and investment practices, and raised security problems about the use of Huawei’s 5G technology.
Furthermore, many European chanceries have become increasingly irritated by China’s diplomatic attacks on leaders and institutions critical of its repressive policy in Tibet and Xinjiang, handling of the socio-political crisis in Hong Kong and ostracism of Taiwan.