China’s way of becoming an economic power

What are goals of China and what are the options for the EU?

China’s role on the international stage has been growing since a few decades. However, China has been making more and more headlines with a China-US trade war and with Xi Jinping’s amendment of the constitution, which allows him to stay in office for life. Nevertheless, these developments do not seem to hurt the country’s economic relations.

With Xi Jinping as its President, China introduced a global connectivity policy, which focuses on infrastructures investments, international lending, cooperations and on influencing research, finance, and political institutions, as on the acquisitions of international media houses. China sees power and connectivity as interdependent, which means the more resources of connectivity an actor owns, the more he is able to gain potential power to influence other actors.

This ambitious globalization strategy is particularly evident in the Chinese megaproject of the "New Silk Road", which should improve the connections between China, the rest of Asia and Europe. This concept created great interest worldwide, but with a modest response from the European side. However, this process is of economic and geopolitical importance. And the European Union should try to actively shape the “New Silk Road” to prevent surprises at the expense of European strategic interests.

The “New Silk Road” could offer a range of opportunities. In the light of the current refugee crisis, the Silk Road could be an option to stabilize the states in the MENA-region and Africa. It could generate access to new potential markets for the export-oriented economy of the EU, as facilitate the European access to the Chinese market. Furthermore, the "New Silk Road" offers an opportunity to contribute to the diversification of the European energy supply. With pipelines in Central Asia and through the Caspian Sea, the EU could become more independent of Russian energy resources. The "New Silk Road" could also serve as a foundation stone for an establishment of a Eurasian Economic Union. With an EU-China cooperation in the matter of the “New Silk Road”, the EU could underline its principles of networking and inclusiveness. Overall, the EU does not want and need regionally and interregionally isolated markets, but depends on new open markets.

China is already today the second largest trading partner of the EU and the EU herself, is the most important trading partner for China. In regard to its globalization strategy, the Chinese investments on the European market have been rising the past few years. However, it is important point out that Chinese companies have little to no barriers to invest on the EU market, while the investment possibilities for European entrepreneurs are limited and strictly regulated on the Chinese market.

In the framework of the “New Silk Road” strategy, China is willing to invest billions of Euros on the European market in order to expand its influence and power in the EU. Therefore China invests in a network of railways, ports, airports, power plants and pipelines (e.g. Chinese investors bought a majority stake of the port in Piraeus in Greece in 2016).

In order to prevent a loss of control of the European market, the EU wants to introduce a procedure of "investment screening". This means, that the European collective security could be threatened if foreign companies want to acquire shares of companies in the field of defence technology or energy infrastructure, or buy European ports and airports. In this procedure, such foreign investment are to be checked precisely and transparently to maintain the control of all the important European infrastructures.