A Comparison between Countries & Territories not in China’s Belt & Road Initiative With Those Who Are
Overall Wealth Remains in the West but Future Manufacturing Competitiveness is along the Belt & Road
Much of the West’s media attention concerning China’s Belt & Road Initiative is either negative or about yet another country joining the scheme. Little has been said about the countries and self-governing territories that have not joined up.
Yet comparisons between the two are apt China and Russia have jointly committed to the concept of a “Great Eurasian Partnership” and this has specific consequences for Europe and Asia especially.
The EU is particular is often seen as suspicious towards China’s intentions, hostile towards Russia, yet do not seem to have realised that they have joined forces and are coordinating in increasing terms as concerns the development of the Belt & Road and the Eurasian Economic Union.
Brussels views one as Chinese, and the other as Russian and appear to be lost when confronted with joint initiatives that involve or are influenced by both.
An example of this is the recent decision by Serbia, a European country with aspirations to join the EU, changing tack and joining the Eurasian Economic Union instead.
With both Albania and North Macedonia having been spurned by the EU last week as concerns previously agreed on deadlines for EU membership negotiations, Brussels is playing a dangerous game when it comes to keeping and then breaking promises.
The Balkans are very much in Russia’s sphere of influence and it will be interesting to see if these two countries also opt for the Eurasian Economic Union as a viable trade bloc alternative instead, just as nearby Serbia has done.
Brussels seems to view that as Moscow’s influence, but that is only part of the story. China is also poised to complete Free Trade negotiations with the Eurasian Economic Union.
Belgrade, therefore, came to the conclusion that being aligned with China and Russia would provide better future trade opportunities than the EU. But are they right?
Of course, the Belt & Road Initiative isn’t only limited to Eurasia. It has expanded into Africa, where both Chinese and Russian companies have been making significant collective inroads.
Beijing was largely responsible for the conclusion of the Pan-African Free Trade Agreement (AfCFTA), which has abolished tariffs on 90% of all intra-African trade good news if you are selling across multiple African nations or wish to combine African components from different countries into one product.
Both China and Russia have been very much aware of this and have stepped up their investments into the region. Interestingly, both countries have invested in their own Free Trade Zones in Egypt China with an FTZ in the Suez Canal Economic Zone, and Russia in nearby Port Said. These, along with other investments, are having an effect. China-Africa trade is up 3% in 2019, while Russia’s has grown 17%.
While China’s forays into South-East Asia are well known, less understood is the impact Russia is starting to make. Vietnam signed what has become a successful Free Trade Agreement with the Eurasian Economic Union a couple of years ago, and that has seen US$10 billion of Russian capital flow into the country, mainly in the manufacturing sector. Cambodia, Indonesia and Thailand are all discussing EAEU membership while Singapore signed off an FTA last month.
Russia is also following China’s lead in providing debt finance. Russia, in a joint bid with Hungary, has just won a US$1 billion tender to supply Rail Carriages to Egypt’s new high-speed lines, with Russia’s Eximbank loaning the money to Cairo. That is an exact copy of China’s Belt & Road financing.
Increasingly, it seems that what Presidents Putin and President Xi said would happen is. The concept of the Greater Eurasian Partnership is not just here it is becoming increasingly active. The reasons to expand overseas are many and varied but essentially run along the lines of wishing to have more control over their respective nations future and their supply chains. Both Beijing and Moscow view the United States as having accumulated too much power and see an increasing trend of Washington using US trade might as a weapon.
President Trump frequently resorts to threatening or using trade sanctions as a form of punishment against governments whose policies run contrary too or are not aligned with those of the US. Beijing and Moscow are seeking to re-establish a more balanced order. But what will a “more balanced order” look like?