Finance

Europe wants to compete with China with 300 billion euros

With the Global Gateway Strategy, the European Commission wants to invest around 300 billion euros in energy, transport and digital infrastructure by 2027. That money must come partly from existing and new European investment funds and partly from private investors.

Investing worldwide

For example, the European Fund for Sustainable Development (EFSD+) makes a maximum of 135 billion euros available. Some EUR 18 billion will come from the European Union budget and another EUR 145 billion will have to come from the pockets of European financial institutions.

With the new billions in investments, the EC thinks it can compete with China in developing countries. China has been able to gain a foothold in countries in Asia and Africa with its New Silk Road for years, but the EU can make up for its arrears, assured Ursula von der Leyen, the president of the European Commission, during the presentation of the plan.

“We will support smart investments in high-quality infrastructure,” says von der Leyen. According to her, the highest social standards, environmental requirements and democratic values ​​will be respected.

Billions in Chinese loans

For about eight billion years, China has been investing in the Belt and Road Initiative, or the New Silk Road. The country invested that money in ports, roads and railways to better connect Asia with Europe and Africa.

For example, the Chinese state-owned company COSCO is a major shareholder in the Greek port of Piraeus, one of the busiest container ports in the Mediterranean. Another example is a highway being built with Chinese money in Montenegro, which is still unfinished after 6 years of construction and some 790 million euros in Chinese loans.

“What the Chinese are doing is buying influence through loans,” says Rob de Wijk, founder of The Hague Center for Strategic Studies. “The projects financed by those loans are carried out by the Chinese themselves. That leads to more and more problems; countries no longer want that.”

Tough power politics

That is not the intention of the Global Gateway, he says. “It is much more on the basis of equality, linked to the direct interests of the EU to get supplies under control. With this strategy, the EU wants to enter into relationships with countries that can play a role in this.”

He doesn’t think China likes this. “Although it depends on where the center of gravity of the investments will be. If that is with technology, such as chips, then China does have a real problem. Then a tech race arises that results in tough power politics behind the scenes.”

Semiconductors as a priority

The European Union has an interest in gaining more control worldwide over the production and transport of raw materials and semiconductors, for example, says De Wijk. “The latter is really a priority for Europe. With this strategy and billions, they can keep those supply chains good and collaborate with other countries in a targeted way.”

According to De Wijk, countries that are high on the list include Japan and South Korea; countries that are technologically advanced and ‘more or less share our values’. “It’s really about global supplies,” he says.

Global Gateway is actually an updated version of an EC plan from 2018, says Frans-Paul van der Putten, coordinator of the Clingendael China Center. “Only now they have come up with a good name for it and put a large amount of money on it.”

Conditions for financing

He finds it difficult to say exactly what will happen with the 300 billion euros. “The question is to what extent this money is not used for current affairs. It is intended to have a strengthening effect on private sector investment, but is that really happening?”

Moreover, says Van der Putten: projects must be found that meet the European conditions for financing. Think of working conditions, attention to nature, money flows that can be controlled. “The basis of Global Gateway is quality, that was already the case in 2018.”

Van der Putten does not think that China will immediately panic because of the proposed billions. “The need for good infrastructures is very great in many countries. There is room for several parties. In the long term, it can also be good for Chinese companies: more competition leads to innovation, so it may also make them stronger.”

Fist against China

He does think that the Global Gateway Strategy can influence China’s influence. “That depends on how well Europe’s plans catch on with the countries involved. It can reduce their dependence on China, make it less necessary for them to knock on China’s door.”

“I hear a lot of comments ‘that we can’t make a fist against the Chinese’. Well, this is played very cleverly by Europe,” says De Wijk.

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