Xavier%20RICHET%20University%20Sorbonne%20Nouvelle,%20Paris%20E-mail:[e-mail]%20Wei%20WANG%20IWEP,%20Chinese%20Academy%20of%20Social%20Sciences%20(CASS)%20E-mail:[e-mail]

1
Xavier RICHET University Sorbonne
Nouvelle, Paris E-mail xrichet_at_gmail.comWei
WANG IWEP, Chinese Academy of Social Sciences
(CASS)E-mail ww_at_cass.org.cn

• One Belt One Road Initiative The New Development
  for Chinas International Economic Cooperation
  and its impact on China EU Relations
• BRICs International Seminar
• Fudan University, Shanghai
• April 20-21, 2016

2
Main Points of the Presentation

• Presenting the OBOR Iniitative
• Interpreting the initiative, assessing the risks
• OBOR and Europe
• The Balkans A Southern Entry?

3
One Belt One Road
4
OBOR From Past to the Future

• Origins Two eyes of China toward the outside
  World
• Ancient Silk Road
• The ancient transcontinental trade
  from Han Dynasty (200 BC) and named by German
  geographer Ferdinand von Richthofen,18331905.
• 1. Route (see the chart P2)
• 2. Comedies
• Output silk, jades, tea, china, traditional
  medicines
• Input perfumes, medicines, fruits, vegetables
  
• 3. Exchanges of culture, religion and politics

5
OBOR From Past to the Future

• Ancient Maritime Silk Road
• The ancient shipping route also from
  Han Dynasty (200 BC) with significant seven trips
  in Ming dynasty, the fifteenth century.
• 1. Route (see the chart P2)
• 2. Task mainly to show the prestige and ambition
  of China. Many gifts, few returns. Shipping trade
  was forbidden at that time.
• 3. Exchanges of culture, religion and politics

6
OBOR From Past to the Future

• The new perspective of One Belt One Road (OBOR)
• Launched by the Chinese government as the
  development strategy in 2013.
• The conception refers to the New Silk Road
  Economic Belt, which will link China with Europe
  through Central and Western Asia, and the 21st
  Century Maritime Silk Road, which will connect
  China with Southeast Asian countries, Africa and
  Europe, known shortly as the "One Belt and One
  Road (OBOR) .

7
OBOR Economic Dimension

• 1. Aspects of cooperation
• Transportation
• Infrastructure development
• Trade and investment
• Energy and natural resources
• Financial security

8
OBOR Economic Dimension

• 2. Principles of cooperation
• Mutual trust
• Mutual benefits
• Mutual learning
• Inclusiveness
• Equality

9
Acting Plan of OBOR

• OBOR runs through Asia, Europe, and Africa,
  connecting the East Asian economic sphere at one
  end with the European economies  at the other.
• The Silk Road Economic Belta series of
  land-based infrastructure projects including
  roads, railways, and pipelinesfocuses on
  strengthening links between China, Central Asia,
  Russia, and Europe (particularly the Baltic).
  China will gain improved access to the Persian
  Gulf and the Mediterranean Sea through Central
  Asia and West Asia, and to the Indian Ocean
  through Southeast Asia and South Asia.
• The 21st-Century Maritime Silk Road is designed
  as two paths one from China's coast to Europe
  through the South China Sea and the Indian Ocean,
  and the other from China's coast through the
  South China Sea to the South Pacific region.
• Source National Development and Reform
  Commission, Ministry of Foreign Affairs, and
  Ministry of Commerce of the People's Republic of
  China, Vision and Actions on Jointly Building
  Silk Road Economic Belt and 21st-Century Maritime
  Silk Road, March 2015,http//news.xinhuanet.com/e
  nglish/china/2015-03/28/c_ 134105858.htm

10
Keys Points to Understand OBOR

• 1. Preconditions for China to carry out OBOR
• Comparative advantage of infrastructure
  construction
• Experiences
• Materials supply
• Building capacity
• Fund for investment Chinas foreign exchange
  reserves reached US 3.8 trillion in December 2014
  
• a) AIID
• b) RMB internationalization

11
Keys Points to Understand OBOR

• 2. The new pattern of China outward investment
  and the changes for the industrial structure
• Infrastructure output high-speed rail, high-way,
  telecommunication and related products
• Industrial transferring ----moving of make in
  China low cost manufacturing products
• Energy cooperation China is a huge energy
  consumer.

12
Milestones of OBOR

• 1. China has made headway via the ASEAN Ten Plus
  One arrangement, the Shanghai Cooperation
  Organization, the BRICS countries, and solidified
  bilateral ties with Russia and countries in
  Central Europe, Central Asia the Middle East and
  South Asia. A bilateral, regional, and
  multilateral cooperation mechanism between China
  and the countries along the proposed routes has
  been established preliminarily in either a fixed
  or non-fixed manner.

13
Milestones of OBOR

• 2. The vision for a 'One Belt and One Road
  allows the countries involved to create a
  three-dimensional and multi-layer transport
  network that connects them via land, sea and air.
  That includes the New Eurasian Continental
  Bridge, which is regarded as the 'modern Silk
  Road', the China-Singapore Economic Corridor that
  runs through the Indo-China Peninsula and the
  Bangladesh-China-India-Myammar Economic Corridor
  that connects China to South Asia. The prototype
  of a backbone passage for the One Belt and One
  Road vision has emerged.

14
Milestones of OBOR

• 3. Several financing platforms such as an Asian
  interconnection and mutual communication
  investment bank, the Shanghai Cooperation
  Organization development fund and the Shanghai
  Cooperation Organization development bank are
  being planned to finance these ambitious
  infrastructure development projects.

15
Milestones of OBOR

• 4. Different logistics hubs are being built
  across the region to support the 'One Belt and
  One Road' initiatives. Several free-trade
  industrial parks have also sprung up that would
  help to connect the production, circulation and
  marketing of goods in the region. The eventual
  economic dividends of the 'One Belt and One Road'
  vision are expected to bring about shared
  economic prosperity that will help promote social
  progress, political stability and overall
  security in the region.

16
Challenges and Risks

• Chinese companies lack experience in investing
  overseas and sustainability for later enterprise
  development. Professor Huang Yiping from Peking
  University warned last year that "China has
  become the third-largest direct investing
  country, but more than half of its deals do not
  provide financial returns."
• Attitudes of the other two giant body US and
  Russia.
• Coordinating with more than 50 countries with
  different culture, social system, or even
  conflicts.

17
Conclusion

• The 'One Belt and One Road' vision is not only a
  strategic conception for the great rejuvenation
  of the Chinese nation, but also a beneficial path
  for the common prosperity of countries along the
  proposed route and an organic combination of the
  Chinese dream with the global dream.
• There is no clear line geographically refers to
  OBOR. they serve more as a roadmap for how China
  wants to further integrate itself into the world
  economy and strengthen its influence in these
  regions.

18
Interpreting the Initiative Political and
Geopolitical Dimensions

• The end of the unipolar world? Reshaping
  international relations
• A Growing Regional Power
• Playing different cards?
• Promoting and investing in the BRICS
• Building new institutions, the New Development
  Bank
• But strong assymetries Brazil Russia
• Going Alone? OBOR Asia -gt Europe
• Rest of the world Latin America, Africa

19
Interpreting the Initiative Political and
Geopolitical Dimensions (2)

• 2nd world trading power
• Means of perpetuating the growth model
• Export expertise in fields of infrastrcutures,
  steel, cement research opportunities outside
  China, modernizing West parts of China, Xinjiang
  (highest oil and gas reserves, lowest
  developement level in China)
• Lenin and the Theory of Imperialism low
  profitabily, overcapacities at home.. managing
  vast overcapacity, necessity to finf new markets

20
Interpreting the initiativeEconomic Dimension

• Accumulation of financial reserves
• 2nd world trading power. Means of perpetuating
  the growth model
• Export expertise in fields of infrastrcutures,
  steel, cement
• research opportunities outside China,
• modernizing West parts of China, Xinjiang
  (highest oil and gas reserves, lowest
  developement level in China)
• Lenin and the Theory of Imperialism low
  profitabily, overcapacities at home
• managing vast overcapacity, necessity to find new
  markets. find markets outside Chinabuild
  infrastrcutures, relocate low value added
  indsutries (textile)

21
A difficult trade off between external and
domestic-led growth

• End of the growth model founded on investment in
  infrastrcutures and exports
• Future growth based on domestic consumption, on
  development of services
• Towards the green economy less energy dependant
  in the future
• Restrcuturing, swtiching could cause economic
  dislocation, threaten political stability
• Looking for external markets

22
Financing who controls?
23

24
A set of risks

• Too Ambitious?
• Time horizon, Implementation, Resources
• Financing, Returns, Sunk costs
• Optimizing infrastrcutures not from A to D but
  between A and B, B and C, C and D.Creating
  numerous hubs.
• Which (international, regional) governance?
• Partnerships
• Weak and risky States(Pakistan),
• Strong States Reluctants (Vietnam, India)..
• Emerging Powers (Iran)
• Entering the Russia back-yard
• Eurasian Economic Union and OBOR
• Convergence between different aims?

25
Risks (1)
26
Risks(2)
27
Risks(3)


28
OBOR the EU the red carpet?
29
The EU at the end of the road..

• EU 1st China trade partner
• China 2nd trade partner after the US
• End of land (Duisbourg) and sea (Pearus) roads
• Question enough goods in Europe to fill up
  train and boats back to China?

30
China-EU Trade

• EU leading trade partners, 2013

• EU-China total trade

31
EU-China Relations

• Asymetric (volumes, contents, Exp, Imp)
• China not yet recognized as a market economy
• No Global Treaty on Investments
• For China one Europe, 28 states
• Core EU
• New Members States (and others 161..)
• Accession countries (Western Balkans)
• Lowest bidder strategies by some countries
• Differentiated attractiveness EU-15, CEES,
  Balkans SEE
• Individualistic strategies followed by member
  states UK, FranceRed carpet policies...

32
China Commitment in Europe

• Chinese investments in the EU from O, mid-2000
  to 14/y in 2014. Stock 46 billions
• EU Members joining the Asia Infrastructure
  Investment Bank , China joining the EBRD
• EU-China Summit in Brussels (June 2016)
• Looking for synergies between the Juncker Plan
  and OBOR Initiative
• AIIB adding 100 billion Silk Road Fund
  investing 40 billion along the road
• EU Commission, European Investment Bk, Silk road
  dund to identify how china and the Junker Plan
  could co-operate

33
Threats?

• UK from a special relationship with the US to
  a golden era with China? But up to now only 1
  of total outflow of chinese FDI..
• Germany the main target? Most attractive to FDI,
  many  hidden Champions 
• OBOR as a reply to Free Trade Agreemment
  supported by the US?
• TPP 12 countries, 800 million people
• TTIP the EU and the US, 820 million people
• OBOR 65 countries, 4,4 billions people.
• Trying to play one country against another
• Human rights issues some countries still
  punished (Norway) other aligned (Serbia..France)
• Other interest for Europe in Asia (South Korea,
  Vietnam, Japan..ASEAN)

34
The Balkans A Southern Entry?

• Geopolitical interests
• Southern Europe One end of the sea road (Pireas)
• Investing in accessing countries? Not a big deal
• Sensible issues and political instability
• Economic opportunities
• Access to northern markets (train,
  infrastrcutures)
• Paving the way for other markets (power plant in
  Bosnia, Serbia, Romania)
• Buiding regional value chains? Car industry in
  Bulgaria, electronics in Romania)
• Beyond OBOR
• SME, family-run business in the region

35
Conclusion (2)

• Real capacity of the Chinese government to
  implement this program?
• Disconnection between growth rate, growth model
  change, financial stability
• What priority over other international issues
• Reaction of other players
• A step by step building up,  path dependency 
  to go forward?
• High risk what will be the nature, content of
  trade in one, two decades?