Better Eurasian connectivity, digital ties to benefit EU, China (China Watch)

By Luigi Gambardella

In a world of uncertainty, it is a dead cert that both European and Chinese leaders will seek greater Eurasian links between two continents at the upcoming 20th China-EU Summit scheduled in Beijing.

The message was already sent by Beijing and Brussels following the Seventh China-EU High-level Economic and Trade Dialogue held in Beijing on June 25, as both senior officials reportedly agreed to boost cooperation on the connectivity forum and the digital economy.

Founded in 2015, the connectivity forum came as the European Union and China sought to build synergies between European investment plans and the Belt and Road Initiative (BRI), proposed by China in 2013, since when a good start between China and Europe has been witnessed.

The success in the transport sector is remarkable, in particular in the China-Europe rail network, which is considered a significant part of the BRI.

By the end of March, China-Europe freight trains had made over 7,600 journeys since March 2011, when the service started. Last year alone, the cross-border rail network had made 3,673 trips, up from 1,702 in 2016 and just 17 in 2011, according to the China Railway Corp.

The busy rail routes have bridged 43 Chinese cities with 41 European cities in 13 countries.

Meanwhile, more direct flights between Chinese and European cities have been launched this year as a result of the China-EU tourism year, bringing a growing number of Chinese tourists to Europe.

The BRI and Europe’s development strategies have much in common. Governments of 11 EU member states have signed cooperation documents with China, and Zhang Ming, head of Mission of the People’s Republic of China to the European Union, welcomed this in May in Brussels. He noted that a number of projects on infrastructure, logistics, e-commerce and finance are well underway.

Brussels’ tone on Eurasian connectivity is positive compared with years ago, when European policymakers seemed rather cautious about the ambitious BRI. However, there are still several issues standing in the way.

Firstly, recent China-EU ties have been clouded by spats about items such as steel overcapacity, market access, intellectual property and investment restrictions, bringing political uncertainty which could deter the speed-up of further connectivity.

Indeed, Brussels and Beijing are working on tough issues. For instance, for steel overcapacity, talks have been conducted at the Global Forum on Steel Excess Capacity, under the framework of G20. Meanwhile, the two sides are well in the process of negotiating for a comprehensive agreement on investment. In the upcoming China-EU summit, the two sides are expected to exchange market access offers in terms of investment liberalization and protection. However, those talks were criticized by many as lengthy and with a lack of breakthrough.

Next, the EU is divided over China’s involvement. Many EU member states have enjoyed cooperation with China. In Serbia, a Chinese enterprise bought a troubled steel mill and turned it around in less than a year; in Greece, the port of Piraeus has regained its position as one of the largest European ports; In the United Kingdom, China is partnering with France to build a nuclear power plant, a stellar example of three-party cooperation on the BRI.

While China receives a warm welcome in some EU countries, on the contrary, concerns of China’s growing presence loom as some EU politicians worry that China’s increasing influence in the bloc would pose risks.

In February, the European Commission issued a document on its own Europe-Asia Connectivity plan, the move was widely viewed as the bloc’s push to counter the BRI.

Last but not least, as digital links forge part of connectivity, China-EU digital cooperation still falls short.

Developing a digital single market stands as part of the EU strategic investment plan while China is a newly emerging digital powerhouse, enjoying the largest digital market in the world and hosts a number of tech giants.

Both sides attach great importance to future digitalization, however their digital coordination remains relatively low. The recent progress registers in the 5G sector, but other strategic co-working plans on essential topics such as AI and big data are far from ready.

Better Eurasian transport (land, sea, air) links and digital ties will promote trade, growth and make a huge contribution to the world economy. Against the backdrop of unprecedented trend of unilateralism in Washington, China and the EU should shoulder the responsibility to defend multilateralism. More efforts are needed to boost China-Europe’s connectivity and digital links, and possible measures could be as follows.

First, high-level exchanges should inject momentum. The upcoming China-EU summit will be the right occasion for leaders to renew their commitments and further promote cooperation on connectivity and the digital sector. Accordingly, the two sides should accelerate implementation of consensus reached by leaders regarding the connectivity forum and digital ties.

Both China and the EU should show a strong political will to address their bilateral challenges including steel, investment and market access. Brussels should make the most of China’s willing involvement.

They should as well promote mutual understanding by increasing exchanges in political, academic, cultural and digital sectors, supporting dialogue between both industry, companies, universities and youth.

Second, given the importance to China, the EU should include the country in its connectivity strategy, which is scheduled to be presented at the 12th Asia-Europe (ASEM) Summit in Brussels in October. Meanwhile, the two sides should speed up cooperation at the connectivity forum, turning political commitments into practice. More transport links such as trains and flights should be facilitated.

Third, Beijing and Brussels should unleash the great potential of digital cooperation. Their digital bond should go beyond 5G and expand to other significant areas such as AI, robotics, bid data, the Internet of Things and high-performance computers.

The two sides could set up a China-EU digital year to boost their digital ties, create synergies between the EU’s single digital market and China’s development plan in digital sector.

Luigi Gambardella, president of ChinaEU. The author contributed this article to China Watch exclusively. The views expressed do not necessarily reflect those of China Watch.

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