Europe\u2019s financial security and Chinese economic statecraft: the case of the Belt and Road Initiative

Ramon Pacheco Pardo

doi:10.1007/s10308-018-0511-z

Abstract

The core of the Belt and Road Initiative (BRI) involves trillions of US$ in investment to increase and improve connectivity between China and different parts of the world. This includes tens of billions of US$ to build or upgrade roads, rail lines, ports, pipelines and other infrastructure to connect China with Europe. With the European continent still feeling the effects of the Global Financial and Eurozone Sovereign Debt crises, this is an opportunity to strengthen its financial security by gaining access to a new source of financing. This new source, however, is linked to Chinese economic statecraft. Thus, cash-starved Europe can tap on the recently launched Silk Road Fund, Maritime Silk Road Fund and other initiatives from the Chinese government. Concurrently, however, political divisions within Europe derived from Chinese investment, as well as normative differences in terms of standards and practices present a challenge to the continent. This article thus analyses the effects of BRI, presented as a tool of Chinese economic statecraft, on Europe’s financial security. It argues that in spite of the latent challenges to said security, the potential benefits have already led many European countries to seek to tap on BRI’s investment as a means to strengthen their financing position.

Highlights

A decade after the Global Financial Crisis (GFC) and subsequent Eurozone Sovereign Debt Crisis (ESDC), Europe is still recovering from years of subdued economic growth
The GFC and ESDC have led to a bigger role for different actors in the financing of European economies
China has made use of Europe’s financial security needs following the severe credit crunch suffered due to the GFC and ESDC to influence the policies of countries across the continent as well as the EU

Summary

Introduction

The question is whether the financial security of others, including Europe, is strengthened or weakened by BRI in general and by the centrality of Chinese funds to the initiative in particular. Renminbi internationalisation and the opening up of overseas renminbi centres to achieve this goal have been used by Beijing to influence the behaviour of target states (Hall 2017).1 Put another way, China has made use of Europe’s financial security needs following the severe credit crunch suffered due to the GFC and ESDC to influence the policies of countries across the continent as well as the EU. Chinese economic statecraft in the area of finance in the form of investment is present in BRI.

Results

Conclusion