Opinion: European Union shaken by China’s ‘Belt and Road’ investment offensive

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(Via The Washington Post) The following editorial appeared in Wednesday’s Japan News-Yomiuri:

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As long as member countries of the European Union deal individually with China, which is boosting its influence through massive investments, they may suffer such drawbacks as a technology exodus. Whether they can maintain their unity will be put to the test.

Chinese President Xi Jinping visited Italy and signed a memorandum with the country over cooperation with China’s Belt and Road Initiative, a scheme to create a mega economic zone. This marks the first time China has concluded a memorandum on this initiative with a member country of the Group of Seven industrialized nations.

Under the memorandum, both countries are to move ahead with economic cooperation worth 2.5 billion euros (about 310 billion yen), including the development of the port of Trieste, which links the Mediterranean Sea and other European countries.

China is suffering from a marked economic slowdown due to its trade friction with the United States. It is obvious China is aiming to accelerate its advance into Europe, by bringing Italy, one of the major EU countries, over to its side.

In Europe, China has built a cooperative relationship by establishing the 16-plus-one, a regular summit meeting of the leaders of 16 Central and Eastern European nations with China over the Belt and Road Initiative. In Greece, a country trying to recover from its debt crisis, the right of management of Piraeus Port, the country’s largest seaport, has been transferred to a Chinese company.

Italy and Central and Eastern European countries share the fact that they have intensified their confrontation with Germany and France, countries that lead the EU on such issues as fiscal discipline and heavy-handed politics.

Should the buying-up by Chinese companies of such key infrastructure facilities as seaports and airports advance in a European country, it could have an adverse impact on security, including that of its neighboring countries.

Responses among EU member countries vary noticeably as to whether China’s telecommunications giant Huawei should be excluded from their governments’ procurement regarding 5G next-generation telecom network technology. It is vital for member countries to share the same recognition.

French President Emmanuel Macron said, “The period of European naivety [in relations with China] is over.” He probably harbors a strong sense of crisis over the present state of affairs, in which the unity among European countries has been undermined.

The European Commission, the EU executive organization, earlier this month positioned China as an economic competitor in pursuit of leadership in trade and advanced technology. The EU member countries will reinforce their advance screening of foreign entities’ buying of member countries’ companies in strategically important industries such as robotics, artificial intelligence and energy.

Apparently with China in view, the EU summit has confirmed its policy of moving forward with legal arrangements to prevent the EU market from being distorted by financial assistance from foreign state-owned enterprises or from foreign governments.

The problem is whether these measures will prove effective. It will be difficult for the EU to regulate economic cooperation between its member countries and China across the board.

Last year, Japan agreed with China to cooperate in infrastructure development to be carried out in third countries. Cooperation is to be carried out on the condition that the fiscal soundness of the recipient country and the transparency of such an investment are taken into account. To encourage China to make investments that meet international standards, Japan should cooperate with the EU.