As doubts grow over China’s vast Belt and Road Initiative, the EU is launching an alternative plan for Asia that it says will not saddle countries with debt they cannot repay.
EU member countries are expected to sign off on the new “Asia connectivity strategy” — which aims to improve transport, digital and energy links, while promoting environmental and labor standards — in time for a major summit of European and Asian leaders next month.
Brussels insists the scheme is not a response to any other player, but its launch comes as the sheen fades on Beijing’s “new Silk Road” initiative, which envisions railways, roads and ports being built across the globe using billions of dollars in Chinese loans.
Talks have been going on for several months with a number of Asian countries that were “interested in looking at the European way,” EU High Representative for Foreign Affairs and Security Policy Federica Mogherini said.
“Our initiative will aim at creating jobs and economic growth and benefits for the local communities,” she said. “I would not say if this is different from other’s proposal, but this is our proposal.”
The new strategy comes after European Commission President Jean-Claude Juncker called for a more muscular EU foreign policy to match the bloc’s economic clout, taking on not just US President Donald Trump’s “America First” approach, but also China’s energetic involvement in Africa and Asia.
The initiative was a “very important step” after criticism of the EU in some quarters that it has been slow to respond to Chinese soft power plays, said Maaike Okano-Heijmans, an EU-Asia relations expert at the Clingendael Institute in the Netherlands.
“We cannot accuse them of not having a vision any more. The challenge is how to turn this into something that’s really an alternative to some countries, because that requires money and more money and more money,” Okano-Heijmans said. “Nobody can rival Chinese money.”
Chinese President Xi Jinping (習近平) earlier this month said that China’s trade with Belt and Road countries had exceeded US$5 trillion, with outward direct investment surpassing US$60 billion.
However, some countries are beginning to question whether the strings attached to the money make it more of a burden than a benefit.
While much of the hard detail of the EU scheme — including the vital question of finance — is yet to be worked out, the proposal stresses the importance of “high environmental and social standards” and of the “fiscal and financial sustainability of infrastructure projects.”
This appears designed to directly address a major criticism of the Belt and Road Initiative, launched in 2013, that the apparent Chinese largesse is effectively creating debt traps.
These fears were highlighted last year when Sri Lanka had to grant a 99-year lease on a strategic port to Beijing over its inability to repay loans for the US$1.4 billion project.
Concerns have grown and last month Malaysia said it was shelving three Beijing-backed projects, including a US$20 billion railway, while Pakistan — until recently an enthusiastic recipient of Chinese money — has vowed more transparency amid fears about the country’s ability to repay loans.
As cybersecurity becomes an increasingly important consideration for governments around the world, the EU’s insistence on transparency might prove more appealing than involvement in China’s “digital Silk Road,” said Philippe le Corre, senior fellow in the Europe and Asia programs at the Carnegie Endowment for International Peace.
“It’s basically allowing Chinese telecoms companies to build infrastructures in these countries, gifting access to portals and e-commerce platforms, anything digital,” Le Corre said. “You’re basically having a Chinese footprint on a very long term and you’re not leaving an alternative.”
Some countries are beginning to realize, Le Corre said, that “it’s not good to put all your eggs in the same basket and that being a dependent of the Chinese empire is a big risk, certainly when it comes to controlling information and controlling technology.”
Alphabet Inc’s Google on Tuesday announced plans to buy a New York office building for US$2.1 billion, confirming its push into the US’ largest city despite the COVID-19 teleworking trend. This is the largest real-estate purchase in the US for an office building since the beginning of the global spread of COVID-19, the Wall Street Journal quoted Real Capital Analytics as saying. Google already rents the premises in Manhattan, which are located on the site of a former railroad terminal in the Hudson Square neighborhood. The Silicon Valley giant envisions a campus with a total surface area of 160,000m2 by mid-2023
‘CORE VALUES’: The contract chipmaker did not specify why the employees were dismissed, but media reports said they had leaked information about customer orders Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has fired seven of its employees for violating the company’s “core values,” the world’s largest contract chipmaker said yesterday. While the company did not disclose exactly why it fired the seven employees, local media reports earlier in the day said that the employees had leaked confidential information about customer orders. In a statement, the company said that it fired the seven at once, adding that it released an internal notice last week to inform the entire company of the move ahead of the four-day Mid-Autumn Festival holilday, which ended on Tuesday. TSMC said it fired the seven
MILD ADJUSTMENT: Two previous efforts failed to curtail mortgage financing, although the new measures should not affect property prices, the central bank governor said The central bank yesterday tightened credit controls for second-home mortgages in specific areas and purchases of plots of land, especially in industrial parks. However, the nation’s top monetary policymaker kept its policy rate at a record-low 1.125 percent for the sixth consecutive quarter, despite revising up its GDP growth forecast for this year from 5.08 percent to 5.75 percent. “Board members factored in economic uncertainty at home and around the world,” central bank Governor Yang Chin-long (楊金龍) said, adding that growing inflationary pressure was a temporary phenomenon induced by bad weather and a low base effect for oil prices. International fuel price increases
DOWNCYCLE: Most buyers are wary about placing new orders, and although the decline could also be as little as 3%, it would be the first drop since the start of the year The average selling price of DRAM chips next quarter is expected to decline by up to 8 percent quarter-on-quarter, with memory chips used in notebook computers and consumer electronics seeing the steepest decline due to excess inventory and a shortage of components, market researcher TrendForce Corp (集邦科技) said yesterday. That means the DRAM industry is entering a new downcycle after experiencing a boom for three quarters, the longest uptrend in the history of the industry. The Taipei-based researcher said it expects the balance between supply and demand to begin tilting toward a surplus in the final quarter of this year. Most DRAM