The Contemporary Silk Road

The Silk Roads were one of the most successful models for development of Asia, Africa, and Europe. Lately, China has been working on a new (and ancient) development. A new Silk Road. The Belt and Road initiative is a global development strategy by the Chinese government advancing infrastructure development and investments globally. However, China needs assistance from serious global actors, such as the economic powerhouse that is the European Union. If the EU were to join the One Belt One Road initiative (BRI), China would be able to finish the highly successful BRI that will ultimately benefit Europe. The European Union ought to enter the Belt and Road Initiative to promote their economic prosperity and to mitigate climate change.

The BRI will improve infrastructure, thus increasing trade, reducing poverty and boosting the European economy. A World Bank summary indicated that BRI transport projects will reduce travel times along economic corridors by 12%, increase trade by 9.7%, increase income by 3.4% and perhaps most importantly, lift 7.6 million people from poverty. Further, China’s model is proven to cut regional and global poverty. This can be observed when President Xi announced $60 billion of funding in different forms, including interest-free loans and grants, in order to promote economic development in Africa. China’s history in battling poverty is a significant factor as to why 53 African leaders are promoting Sino-African relations. Domestically, China has also axed the poverty rate from 84% in 1980 to 10% now and foreign leaders are looking for Chinese guidance that would replicate such success worldwide. Not only is decreasing poverty important to saving lives, it helps establish more workers and advances the economy. In terms of the economy, from the European perspective, the most relevant infrastructural projects of the BRI are railways and ports. Fortunately, the BRI’s 240 billion-dollar investments in railway and port infrastructure will tremendously influence trade relations between China and Europe by establishing new infrastructure, thus lowering transportation costs and increasing overall trade volumes. This positively impacts each European country’s trade turnover with Asia. Evidence of this can be observed when Greece experienced rapid growth shifting from 2% of total Mediterranean traffic absorbed in 2008 to 13% in 2015, which was when they joined the BRI. It is important that the EU joins the BRI because it is the only way that the EU may gain the important economic benefits that will increase trade, reduce poverty, and boost the economy.

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China’s BRI is the best and fastest way to move the world towards renewable energy. To this end, China has issued $25 billion dollars worth of green bonds for renewable infrastructure investments. According to the IEA, China now has one-third of the world’s wind power, four of the top ten wind-turbine makers, six of the top ten solar-panel manufacturers, and a quarter of the world’s solar capacity. As the principal market for renewable energy worldwide, China has the means to provide ‘green, low-carbon and circular development’ to billions in the development of a green Belt and Road. As pointed out in a recent NRDC report, based on BRI countries’ targets for renewable energy, the projected installed capacity of renewable energy for 38 countries in the BRI could reach 644 Gigawatts from 2020-2030, and total investment from Beijing in wind and solar power could reach $644 billion dollars. Fortunately, this means that there is a huge window of opportunity to increase investments in renewable energy through the BRI. Chinas General Certification Center’s promotion of a mutual recognition system for international standards for new energy based on wind and solar means that there is huge potential for the BRI’s renewable energy cooperation. The EU needs to join the BRI in order to assist the development of China’s global Belt and Road initiative that will mitigate the devastating effects of climate change.

It is often thought that China is using the BRI as a source to trap countries into debt, thus gaining access to infrastructure. Moreover, the Sri Lanka example of when the country had their port seized to a supposed ‘debt trap’ by China’s BRI is commonly cited. While this position is popular, it is not supported by the studies and the reality of the Sri Lanka situation. Firstly, on debt traps, China is writing off debts to countries that are in debt. In fact, A Rhodium Group’s research looked at “40 cases of debt renegotiation between the years 2007 and 2019” and found there was only one confirmed case of asset seizure, which was in Sri Lanka (Zhou). This report concluded that “China had renegotiated 50 billion dollars of loans” and in almost all cases, debts to Beijing had either been written off or payment was completely deferred (Zhou). China has been renegotiating debts with numerous countries because it is not economically viable for China to be in debt with its projects. When trade partners are doing well, China does well too. Moreover, looking specifically at the case of Sri Lanka, leasing the Hambantota port to a Chinese company was a commercial decision, not one of debt. According to Sri Lankan economists, “the country's debt is not of China's making” (Moak). Chinese loans only constituted 10 percent of Sri Lanka's total foreign debt, so the high debt of Sri Lanka is not due to the money owed to China, but mainly because Sri Lanka did not do a “good assessment on the financial terms and repayment requirements” (Bicocca). The entire notion of debt traps and the seizure of assets being a formidable threat to the EU’s financial and hegemonic wellbeing, is not supported by the reality of what is occurring in the Status Quo.