How China Is Disrupting Supply Chains in Europe
Chinese President Xi Jinping made a series of trips to Eastern Europe in 2016 as part of his advocacy campaign for the Silk Road Economic Belt and 21st Century Maritime Silk Road (OBOR). The initiative, launched by Xi Jinping in the autumn of 2013, aims to link Asia with Western Europe, CIS countries, and Africa through a network of interconnected infrastructures, especially rail, road, and maritime transport. OBOR is now the largest and most important geostrategic, economic and financial project being implemented globally. China, who has been systematically and intentionally bypassed by the most important regional trade agreements, is now making history by literally building its own way into the Western markets viewing Central Eastern European Countries (CEE) as the best opportunity for an approach.
Compared with the Marshall Plan, the regeneration plan for Europe after the WWII, OBOR is actually more than 10 times larger in terms of investment. The initiative becomes even more important as the recent US presidential election seems to be putting an end to the Trans Pacific Partnership (TPP), the Transatlantic Trade and Investment Partnership (TTIP), and sheds a shadow of uncertainty on NAFTA.
China was never able to sign a free trade agreement with the EU despite the impressive trading volumes between the two and the increasing year-to-year trend. China is the EU’s second largest trading partner behind the US and the EU is China’s biggest trading partner.
China is hoping it will have more success in approaching the EU through CEE: the Baltic countries, Poland, Czech Republic, Hungary and Romania who have some common features:
- They are newer members of the EU,
- They are positioned towards the European border with Russia and represent a “gateway” to Europe from the East,
- They are all considered less economically developed than their Western brothers,
- As full members of the EU, have a saying in the decision-making process and can serve as influencers in Brussels.
The Beijing government is also putting its money where its policy is with the Asian Infrastructure Investment Bank (AIIB). The AIIB opened for business in January of 2016 and counts 57 founding members, including most of the Western European countries. Considered the financial arm of OBOR, the AIIB is expected to fund infrastructure projects in areas such as energy, transportation, and communication throughout Asia.
