Prof. Dr. Shiwei SHI

Shiwei Shi is Professor for international economics and Director of Centre for European Studies at University of International Business and Economics (UIBE). He has studied in Berlin and Potsdam between 1990 – 1998 and received his doctor title of Dr. rer. Pol. He worked in Beijing since then. He came 2017 back to Berlin and is teaching at Institute of Sinology (OAS) in the framework of the Confucius China Studies Program(CCSP). Prof. Dr. Shi is Member of the Council of Chinese Association for Germany Studies, Research fellow of Research Department of International Cooperation Center of National Development and Reform Commission and Research Fellow of Zentrum für Deutschlandstudien (ZDS), Peking University.

Review of the BRI

The Chinese senior leader Xi Jinping launched BRI (new silk road) in 2013 and it contributes a great deal to the global economic growth through constructions of infrastructure and trade between the participants since then. It has become a motor for further development of economic globalization and multilateralism in governing the international economic and financial system right now.

The core of the BRI is build-up a Eurasian intercontinental overstretching network of see road (so called 21centrury Maritime Silk Road) and country ways (6 Silk road economic corridors) through construction of railway network, highways, see ports, airports as gas pipelines and internet connections as well. But is also enclosed cooperation in fields of trade, project funding, and cultural understanding based on mutual benefits.   

By the end of January 2020, 138 countries and 30 international organizations had signed 200 Belt and Road cooperation agreements with China.

According to China’s Ministry of Commerce, the total volume of trade in goods between China and the BRI countries increased from around USD1 trillion in 2013 to USD1.34 trillion in 2019. The share of BRI countries’ in China’s total trade reached almost 30% in 2019. And China invested USD 1000 billion in countries along the BRI since 2013, at which the ODI amounted more than USD 100 billion. The American Heritage Institute estimated the investment volume of about USD 900 billion in the same period. The participating countries of BRI intensified their FDI in China in the same period too and invested more than USD 50 billion between 2013-2019, among them 8.42 billion in 2019, an increase by 30.6%. In the first three months of 2020, the total value of new Belt and Road projects exceeded USD 25 billion.

The BRI has already improved the infrastructure network among participating countries. Shipping routes now connect China’s ports with over 200 countries and 600 major ports. The BRI also created more than 244,000 jobs for workers in local markets in the 2013-2018 period.

Why did China launch the BRI?

I argue that the BRI belongs to development strategies Chinas, specifically for the better use of globalization for achieving the ambitious goal to building China to an economic and technological powerful country by 2050, that means the GDP per capita will reach USD 30,000-40,000. For comparison, GDP per capita of 10 most innovative countries in the world – inclusive USA, Japan and Germany – amounted USD 54,000 in average in 2019. China has achieved a spectacular growth rate about 10% for more than 30 years and the GDP per capita reached USD 10,000 in 2019, it lay however behind the threshold for developed countries with USD 12,000 (World Bank). Recently, Premier Li Keqiang revealed a figure that alarmed Chinese people very much: More than 600 Mill Chinese have a monthly income of less than 130 Euro. For reaching the above-mentioned goal of the “Chinese dream”, economists have estimated, Chinese economy needs a high growth rate of 5% between 2020-2035. But China experienced a slowdown of growth in 2012, the growth rate dropped from ca. 10% to 7% p.a. between 2012-2016 and 6.5% between 2017-2019.

There were several reasons for this situation: First, the world economy recovered slowly after the world financial and economic crisis in 2008. Chinese export went down in absolute term in 2015 after 2009 (- 8%). Secondly, Chinese manufactures haven lost their comparative cost advantage (labor costs) to other developing countries like India, Bangladesh, and Vietnam etc. On the other hand, conditions for “go abroad” of Chinese firms were ripe. Some Chinese enterprises have improved their competitive edge like Huawei and Haier and can operate all around the world. Chinese skill and technology in sectors like high speed railway and highway are on the top of the world. The competitive Chinese firms go abroad now not only to source out new technology and cooperation partner, but also to supply the new markets. Therefore, the motives for launching BRI by the Chinese authority are primary economic one.

if one judges political decisions from the view of the development goals, one can understand them better. There are allegations against China’s international engagement und specific against the BRI by some western observers:

  • China wanted to change and substitute the rules of game for the international trade and investment system through BRI and enhance its geopolitical influences in regions and countries along the silk road as it is becoming a stronger economic and political power.
  • China practices a kind of colonialism by BRI aiming at exploitation of the countries in Asia and Africa just like the old colonialists from Europe did.

I think that those allegations are groundless. China benefits very much from the current international trade and investment system and supports globalization and multilateralism firmly. China needs a peaceful international environment for its development, doesn’t want to involve in military conflicts. Major parts of Chinese economic successes are due to economic opening and the imports of technology from abroad. There is no reason that China will be autarky in the future. Rather the further opening will create more chances for cooperation between partners, as it the implementation of BRI has shown. As for the polemic of colonial policy, one needs only to reply that the construction projects and their funding are based on mutual benefits between souverain states, not by force. If one party finds the project unreasonable, it can withdraw. The alleged debt traps have not been verified. 

Chances for EU provided by BRI

The EU 27 is the biggest trading partner of China and the China-Europe Railway Express is playing an important role for the logistic of bilateral trade and expanded very quickly in recent years: the trips by China Railway Express amounted near 4000 in 2017 and above 12000 in 2020, more than tripled within only 3 years.

The Chinese investment in Europe has also increased above-average in last years. The cooperation projects for promoting the infrastructure are especially welcome in Central and Eastern Europe (EEC) and in the European Mediterranean countries. But there is still large potential to be explored: for instance, EU Commission has started the “Investment Plan for Europe” (Junker Plan) in November 2014, established an European Fund for Strategic Investments with the purpose to support the strategic projects across the continent, in order to help to close the investment gap in critical infrastructures which are very essential for the industry of the future like digital infrastructure, energy and transport.

The Junker Plan has many in common with the BRI, therefore a Connectivity-Forum has been established between EU and China, but nothing has happened since then! I think cooperation in connectivity will be one of the synergies between China and EU. Both sides have their own expertise. Other fields are digitalization and green transformation of economy. EU and China can search for co-funding in such endeavors and exchange experiences to incentivize private investor to engage in them. And EU enterprises can cooperate with Chinese ones in third markets. Otherwise EU will lose its Opportunities for more growth, jobs and influences. European politicians should stop seeing China ‘s development as a threat and passes the CAI in European Parliament as an urgent agenda.