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.”
MAJOR BENEFICIARY: The company benefits from TSMC’s advanced packaging scarcity, given robust demand for Nvidia AI chips, analysts said ASE Technology Holding Co (ASE, 日月光投控), the world’s biggest chip packaging and testing service provider, yesterday said it is raising its equipment capital expenditure budget by 10 percent this year to expand leading-edge and advanced packing and testing capacity amid strong artificial intelligence (AI) and high-performance computing chip demand. This is on top of the 40 to 50 percent annual increase in its capital spending budget to more than the US$1.7 billion to announced in February. About half of the equipment capital expenditure would be spent on leading-edge and advanced packaging and testing technology, the company said. ASE is considered by analysts
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Huawei Technologies Co’s (華為) latest smartphones carry a version of the advanced made-in-China processor it revealed last year, results from an independent analysis showed. This underscored the Chinese company’s ability to sustain production of the controversial chip. The Pura 70 series unveiled last week sports the Kirin 9010 processor, research firm TechInsights found during a teardown of the device. This is a newer version of the Kirin 9000s, made by Semiconductor Manufacturing International Corp (SMIC, 中芯) for the Mate 60 Pro, which had alarmed officials in Washington who thought a 7-nanometer chip was beyond China’s capabilities. Huawei has enjoyed a resurgence since
purpose: Tesla’s CEO sought to meet senior Chinese officials to discuss the rollout of its ‘full self-driving’ software in China and approval to transfer data they had collected Tesla Inc CEO Elon Musk arrived in Beijing yesterday on an unannounced visit, where he is expected to meet senior officials to discuss the rollout of "full self-driving" (FSD) software and permission to transfer data overseas, according to a person with knowledge of the matter. Chinese state media reported that he met Premier Li Qiang (李強) in Beijing, during which Li told Musk that Tesla's development in China could be regarded as a successful example of US-China economic and trade cooperation. Musk confirmed his meeting with the premier yesterday with a post on social media platform X. "Honored to meet with Premier Li