Title: Xavier%20RICHET%20University%20Sorbonne%20Nouvelle,%20Paris%20E-mail:%20xrichet@gmail.com%20Wei%20WANG%20IWEP,%20Chinese%20Academy%20of%20Social%20Sciences%20(CASS)%20E-mail:%20ww@cass.org.cn
1Xavier 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
2Main Points of the Presentation
- Presenting the OBOR Iniitative
- Interpreting the initiative, assessing the risks
- OBOR and Europe
- The Balkans A Southern Entry?
3One Belt One Road
4OBOR 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
5OBOR 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
6OBOR 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) .
7OBOR Economic Dimension
- 1. Aspects of cooperation
- Transportation
- Infrastructure development
- Trade and investment
- Energy and natural resources
- Financial security
8OBOR Economic Dimension
-
- 2. Principles of cooperation
- Mutual trust
- Mutual benefits
- Mutual learning
- Inclusiveness
- Equality
9Acting 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
10Keys 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
11Keys 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.
12Milestones 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.
13Milestones 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.
14Milestones 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.
15Milestones 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. -
16Challenges 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.
17Conclusion
- 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.
18Interpreting 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
19Interpreting 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
20Interpreting 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)
21A 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
22Financing who controls?
23 24A 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?
25Risks (1)
26Risks(2)
27Risks(3)
28OBOR the EU the red carpet?
29The 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?
30China-EU Trade
- EU leading trade partners, 2013
31EU-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...
32China 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
33Threats?
- 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)
34The 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
35Conclusion (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?