Europe Should Share in the New Silk Road and the Asian Infrastructure Investment Bank

From the New Silk Road to the Asian Infrastructure Investment Bank (AIIB), China is playing an ever-increasing role at the regional level. Europe would be well-advised to consider this new development more seriously. 2015 can be seen as a milestone in diplomatic relations between the European Union (EU) and the People’s Republic of China as it marks the 40th anniversary of their diplomatic relations. At the Europe-China summit of June 29, 2015, which was held in part to commemorate this anniversary, Chinese Premier Li Keqiang was noticeably keen to explain the ambitious Chinese “One Belt, One Road” initiative. This “New Silk Road” concept was first presented by President Xi in 2013 in Astana, Kazakhstan and aims to strengthen ties between China, Asia, Africa and Europe. However, there has been no official reaction to this initiative from the European Union (EU) or its member states so far. The initiative combines a land route stretching from China through Central Asia and Turkey to Europe and a sea route connecting China with Africa through the Indian Ocean. The project seeks to develop transport infrastructure and accelerate trade in tangible goods and people through both routes. This 21st century initiative is in no way nostalgia for a glorious past, it is based on specific geostrategic and economic calculations. The Middle Kingdom aims to achieve three objectives. First, it needs to revitalize its economy. Its GDP grew by 7.4% last year, the lowest figure since the 1990s. The “One Belt, One Road” initiative, and the priority it gives to infrastructure development, are designed to meet the expectations of Chinese State-owned enterprises which are struggling with sliding domestic sales and overcapacity. Furthermore, the overall purpose of the New Silk Road is to secure China’s energy supply through new pipelines which will be laid down in Central Asia and Southeast Asia’s deepwater ports. These massive infrastructure projects will also accelerate the internationalization of the renminbi and secure it reserve currency status. Finally, and this is the most important goal, the New Silk Road is primarily a strategic and geopolitical initiative. China wants to establish and maintain stability in both Eurasia and South Asia. The Chinese leadership believes that economic prosperity is the only way to maintain peace among its fragile neighbors, from transitional Central Asia, volatile Pakistan, war-torn Afghanistan to the boiling Middle East and North Africa. One might call this initiative the “Chinese Marshall Plan”. From Beijing’s perspective, investments in infrastructure development are the royal route to exporting the Chinese development model, i.e., the right to develop the national economy in one particular way irrespective of any political or cultural differences linked to national identity. At the strategic level, the concept “One Belt, One Road” and the establishment of the AIIB are a clear signal that China is ready to play a bigger role in regional and global governance. In the last few decades, China has been characterized by many as an “agenda follower” as opposed to an “agenda setter”. The key principle of China’s foreign policy since President Hu Jintao (2002-2012) has been “peaceful rise”, the notion that succeeded Deng’s mantra of “maintaining a low profile”. This phase has been completed and the Chinese are now looking ahead. China’s growing economic power and political clout have convinced Beijing that the development of the national economy can no longer be subject to rules decided elsewhere. China has to be more aggressive in protecting its national interests. Relying on a clever mix of Confucianism and Marxism, Chinese leaders are now articulating a strategic vision based on the concepts of the “harmonious society” of former President Hu and the “new type of relationship between major powers” of President Xi Jinping. These concepts, largely ignored in the West, are not empty words. They have recently generated a series of very concrete changes in China’s diplomacy: the establishment of the Shanghai Cooperation Organization (SCO), BRICS (Brazil, Russia, India, china and South Africa) and economic forums such as the Boao Forum Asia (BFA), held in Boao in China (Hainan province) and modeled after the World Economic Forum held annually in Davos, Switzerland. This new policy represents a substantial strategic change which is poorly understood, as it is based on a non-Cartesian strategic calculation (a costs and benefits analysis dear to Realists, if you prefer) and will inevitably challenge the current world order dominated by a Pax Americana. The unexpected success of the AIIB is only a “teaser” – and should be understood as a clear call for changing the rules of the world’s financial system. The ball is now in Europe and Washington’s courts. They must decide how to respond to this major strategic initiative put forward by Asia’s rising power. Although Europe is mired in its own Greek and Ukrainian crises, it is imperative that it acknowledges the threat posed by the New Silk Road and AIIB and comes up with a strategic response to it. Enormous political and economic interests are at stake, but keeping regional peace and stability at the gates of Europe, giving a fresh impetus to economic development and ensuring the security of Europe’s energy supplies should be the focus of Europeans. The Central Asian states, India, Pakistan and Iran are huge new markets for European companies. European influence, which is still very real in these countries, could be used as a lever for defending both European and Chinese interests and re-opening the increasingly important but difficult Chinese market to European enterprises. As China’s biggest trading partner, Europe must not let China define the contours of “One Belt, One Road” alone. It is a malleable concept, like all the “pilot projects” of which Chinese leaders are so fond, which will be tested, improved on and built with the participation of all the states involved. Europe currently has a unique opportunity to shape it to suit its own interests, and should embrace such a task enthusiastically but at the same time remain on its guard. This is a historic moment, at both ends of the New Silk Road, to bridge continents and contribute to economic growth in many so-called emerging markets.   Richard Rousseau is Associate Professor at the American University of Ras Al Khaimah, United Arab Emirates. His research, teaching and consulting interests include Russian politics, Eurasian geopolitics, international political economy and globalization.