Sunday, April 14, 2024
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Home » EU and China Compete With Global Investment Schemes

EU and China Compete With Global Investment Schemes

by Brayden Avery
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Two years ago, the European Union launched its “Global Gateway” initiative to open the door to the world and investment in developing countries and emerging markets. And this month, it launched the first Global Gateway Forum as a means of taking stock of developments with partners, providing motivation, and strengthening cooperation and exchange of ideas for new projects.

The EU originally set up its global investment scheme to compete with China’s Belt and Road Initiative, which some call the New Silk Road. Over the past 10 years, the communist economy has invested some €900 billion ($948 billion) in infrastructure projects around the world. While the EU plans by 2027 to invest €300 billion only, in fewer countries. The bloc has about 60 partners for its Global Gateway scheme, whereas China has over 150.

“Global Gateway is about giving countries a choice, and a better choice,” said European Commission President Ursula von der Leyen at the opening of the Forum on October 25 in Brussels, implying that the EU scheme was fairer and less bureaucratic than China’s. “Because for many countries around the world, investment options are not only limited, but they all come with a lot of small print, and a very high price.” She added: “Our resilience is stronger when you, our friends, are also more resilient. We all win. That is why Europe has chosen to work closer with our partners.”

EU promotes sustainability

The EU’s scheme is not as focused on transport and infrastructure as China’s. Chinese investment has gone largely to expanding railway and road networks and to construct ports, helping to transport containers with goods from China more efficiently. The EU says it wants its global gateway to promote green and sustainable projects in areas such as energy, medicine, and education.

The scheme’s first major project, with Ghana, Rwanda, Senegal and South Africa, was the construction of vaccine manufacturing hubs on the African continent in 2022. There are now 90 Global Gateway projects, worth some €66 billion. More deals were signed during the Forum in Brussels, although very few heads of government attended.

Bangladeshi Prime Minister Sheikh Hasina signed an agreement to develop renewable energies in her country with EU funding, while Vietnamese Deputy Prime Minister Tran Hong Ha secured commitments for the green transformation of Vietnam’s energy industry.

The EU hopes through more agreements to secure access to minerals and rare earths in Asia and Africa.

Sheikh Hasina, the prime minister of Bangladesh, was one of the few heads of state to attend the Forum in Brussels

‘Mobilizing financial firepower of Europe’s leading companies’

The European Commission and the European Investment Bank (EIB) in Luxembourg, which plays a major role providing funds, examine all applications for potential Global Gateway projects. But a large bulk of the investment is also supposed to come from private European companies, which have more say than Chinese companies. “We are mobilizing the financial firepower of Europe’s leading companies,” said von der Leyen in Brussels. “The magic is in this public-private teamwork — through public funds, training and enabling regulation, we can provide the long-term predictability private investors need to start ambitious projects.”

German mechanical engineering companies, which dominate the European market, have welcomed the Global Gateway scheme and generally want to participate. Ulrich Ackermann from the VDMA, the largest network organization for the machinery and equipment manufacturing industry in Germany and Europe, said that it was important that projects be implemented rapidly. “The EU should apply its principles: transparent calls for projects based on criteria of sustainability, upfront calculations of the return on investment, and measures to prevent corruption. Internationally recognized technical standards should apply. To provide a counterweight to the rightly criticized weaknesses of the Chinese ‘Belt and Road’ initiative,” he said.

The Hong Kong-based English-language newspaper South China Morning Post recently suggested in an article that China could indirectly influence decisions by European companies. Since September, the EU has sought advice from a group of large companies, which are participating in the Global Gateway scheme, including Siemens, Volvo, Alstom, and Maersk, which all have business interests in China. For their part, Chinese companies hold large stakes in the Portuguese energy company EDP and the port of Antwerp, which are also serving on the advisory board.

Countries can take part in both schemes

European Commission officials have pointed out that Global Gateway is not exclusive. The goal is to gain freedom from China but not to decouple entirely. A country that takes part in Global Gateway is able to participate in China’s Belt and Road Initiative at the same time. Bangladesh and Serbia are just two of the numerous countries doing this.

At last week’s Belt and Road summit in Beijing, which was attended by 10,000 delegates, Chinese Foreign Minister Wang Yi said that he could imagine working with the European initiative in some way. He said competition had to be accepted from a “positive perspective” and expressed a “willingness” to link the two schemes, “to play out the advantages of both China and the West.”

Some 10,000 delegates attended the Belt and Road summit in Beijing

Jean Saldanha, director of the Brussels-based Network for Debt and Development, which advocates for human-rights based financial and economic systems, said the Global Gateway did not put enough emphasis on human rights, good governance, and other such standards. “How different is it from the Belt and Road Initiative?” she asked on the sidelines of the forum. “What it finally balls down boils down to is that Europe is trying to compete with China and nothing more than that.”

She said that time would tell but right now it was “very difficult to see the differences.”

Source : DW

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