BRI Won’t Increase Europe’s Trade To China

China will not trade fairly with the EU

Lee, May 2019, The end of Chimerica The passing of global economic consensus and the rise of US–China strategic technological competition (2019), Professor John Lee is a senior fellow at the United States Studies Centre at the University of Sydney. He is also a senior fellow at the, Hudson Institute in Washington DC. He served as senior adviser to Australian Foreign Minister Julie Bishop from 2016 to 2018., https://s3-ap-southeast-2.amazonaws.com/ad-aspi/2019-04/SI%20136%20The%20end%20of%20Chimerica.pdf?zquA2PovEXIFcI6_E30FH9PuLVx7PMHM
In this context, the US perspective is in good company. For example, the EU is increasingly accusing China of ‘failing to reciprocate market access and maintain a level playing field’. The EU has taken aim at ‘distortions in China’s economic system’, including Beijing’s state-driven policies such as ‘Made in China 2025’ and the preserving of domestic Chinese markets for ‘national champions’ and shielding of those entities from legitimate competition. According to the EU, China’s agenda is achieved through: selective market opening, licensing and other investment restrictions; heavy subsidies to both state-owned and private sector companies; closure of its procurement market; localisation requirements, including for data; the favouring of domestic operators in the protection and enforcement of intellectual property rights and other domestic laws; and limiting access to government-funded programmes for foreign companies.20 The EU also chides China for creating an unlevel playing field in common export markets by offering Chinese companies ‘access to state backed loans and export credits at preferential terms and applying different corporate and labour standards’. It calls out China for investments in many countries that: frequently neglect socioeconomic and financial sustainability and may result in high-level indebtedness and transfer of control over strategic assets and resources. This compromises efforts to promote good social and economic governance and, most fundamentally, the rule of law and human rights.21 n September 2018, trade ministers from the US, the EU and Japan issued a joint statement criticising such practices.22 Indeed, global criticism of and pushback against China’s Belt and Road Initiative is growing due to similar concerns.2

China won’t make trade concessions in order to protect CCP power

Lee, May 2019, The end of Chimerica The passing of global economic consensus and the rise of US–China strategic technological competition (2019), Professor John Lee is a senior fellow at the United States Studies Centre at the University of Sydney. He is also a senior fellow at the, Hudson Institute in Washington DC. He served as senior adviser to Australian Foreign Minister Julie Bishop from 2016 to 2018., https://s3-ap-southeast-2.amazonaws.com/ad-aspi/2019-04/SI%20136%20The%20end%20of%20Chimerica.pdf?zquA2PovEXIFcI6_E30FH9PuLVx7PMHM
These issues go to the heart of China’s political economy and will remain unresolved by any US–China trade deal. Beijing won’t leave the commercial fate of its companies to the gods of competition, competence and chance. More than any other major economy, it’s prepared to use state power, laws, regulations and resources to: • ensure that state-owned enterprises and ‘national champions’ dominate in targeted sectors, domestically and internationally • lock in guaranteed external markets for those entities, especially through its Belt and Road Initiative and the initiative’s Digital Silk Road arm • support the use of forced or illegal IP transfers to allow state-owned enterprises and national champions to compete and eventually dominate • rely on opaque and even corrupt political deals to create economic footholds for Chinese entities (such as occurred in Malaysia24 and the Maldives25). These approaches inherently undermine what globalisation and interdependence are designed to facilitate and enhance: the maximisation of efficiency and creation of new opportunities for participants based on market forces. China’s approach in the global economy reflects its own political-economic set-up, which is designed to ensure that the CCP retains the levers of economic power and relevance. While all governments intervene in the domestic and global economy to some degree, the nature, scale and extent of intervention by the CCP and Chinese state mean that authoritarian China plays a vastly different game from other major economies in the global system. For example, a recent survey of the largest 98 companies in China revealed that less than one-quarter were privately owned.26 In all state-owned firms, the CCP has a significant if not decisive say in major corporate decisions and senior managerial appointments.27 Even when it comes to private firms, China’s Company Law stipulates the establishment of party committees in all commercial entities ‘to carry out the activities of the party in accordance with the charter of the Communist Party of China’.28 Similarly, the 2017 National Intelligence Law demands that ‘Any organization and citizen shall … support, provide assistance, and cooperate in national intelligence work, and guard the secrecy of any national intelligence work that they are aware of …’29 The poor separation of political and economic agencies allows the party-state to blatantly manipulate markets and distort competition to achieve the CCP’s goals.30

WTO can’t protect free trade with China

Lee, May 2019, The end of Chimerica The passing of global economic consensus and the rise of US–China strategic technological competition (2019), Professor John Lee is a senior fellow at the United States Studies Centre at the University of Sydney. He is also a senior fellow at the, Hudson Institute in Washington DC. He served as senior adviser to Australian Foreign Minister Julie Bishop from 2016 to 2018., https://s3-ap-southeast-2.amazonaws.com/ad-aspi/2019-04/SI%20136%20The%20end%20of%20Chimerica.pdf?zquA2PovEXIFcI6_E30FH9PuLVx7PMHM
The US administration’s discontent with global economic institutions such as the WTO stems from this reality. Since 2009, China has been involved in approximately 90% of all the WTO cases that the four largest economies—the US, China, the EU and Japan— have brought against each other.31 Those advocating for a ‘WTO as usual’ approach to dispute resolution often point out that the US has won the vast majority of cases it has brought to the WTO, and China has complied with an overwhelming proportion of decisions handed down.32 To be sure, the WTO is reasonably effective in adjudicating cases in which there is blatant and formal evidence of collusion between the state and Chinese enterprises, placement of overt mandatory obligations on foreign firms to purchase inputs from local firms, or flagrant granting of exclusive rights to arbitrarily chosen firms to distribute or sell in the domestic market. The problem is that WTO rules weren’t designed to deal with a Chinese political economy that’s neither a ‘command economy’ nor a ‘market economy’ as established under existing trade rules. In particular, the complex and opaque networks of relationships and connections between the CCP, the state, regulatory entities, administrative entities, businesses and individuals are unique to China and unprecedented in scale and density among nations. How do we legally determine whether an entity is associated with the CCP or the Chinese state? All major Chinese firms must establish an internal party committee. Even so, existing rules can’t decide whether that entity qualifies as an ‘extension of the state’. The WTO prohibits certain subsidies provided by governments and their associated entities but can’t formally rule on whether Chinese firms (which have close connections with the CCP) ought to be considered ‘associated’ entities.33 This means that there can be no adjudication on the massive cross-subsidisation between Chinese firms, which continues unabated. The WTO rules were simply not designed to cope with the deep and opaque connections between the authoritarian regime of President Xi Jinping and all economic actors within China, whether state-owned or ‘private’. Many more potential cases will never be brought before the WTO because it doesn’t have either the jurisdiction or the body of case law to resolve these basic questions. The opacity of the Chinese political economy also makes the gathering of evidence required for a formal case distinctively difficult. It is also highly unlikely that China would agree to reform or renegotiate the text of the Marrakesh Agreement, which established the WTO, in a manner that would significantly address these issues. Indeed, the failure of APEC leaders to agree on a written declaration for the first time at the conclusion of their November 2018 meeting in Papua New Guinea was largely due to China’s refusal to accept the need for WTO reform to address ‘unfair trade practices’ in the document.34 One must remember that Beijing’s higher priority is to achieve the economic and strategic objectives laid out in policies such as the Belt and Road Initiative and Made in China 2025,rather than to address WTO weaknesses that currently offer its political economy unique advantages and cover. In addition, the WTO is designed to deal primarily with trade-related issues rather than issues involving the forced transfer or theft of IP. Meanwhile, estimates of the cost to the US economy of Chinese IP theft range in the hundreds of billions of dollars.35 At least one in five members of the American Chamber of Commerce in China (AmCham China) has revealed that it has been pressured to transfer technology to Chinese firms in order to continue its operations in the Chinese market.36 This must be understood in the context of current Chinese industrial policies that call for the ‘absorption, digestion, and re-innovation of foreign intellectual property’37 to meet the Made in China 2025 goals of 40% self-sufficiency by 2020 and 70% by 2025 (which arguably violate existing WTO ‘local content’ rules).

Europe will not be able to make a fair deal with China

J Holslag, 2019, onathan Holslag is a Belgian professor, author and policy advisor. Jonathan Holslag is a professor international politics at the Free University of Brussels, where he teaches diplomatic history and international politics, and also lectures on geopolitics at various defence academies in Europe, The Silk Road Trap, page number at end of card
For many years, the European Union has hoped to build a balanced partnership with China and also expected the European institutions to engage China in regard to the trade deficit, market access and so forth. This book has found that this patient and constructive engagement has been unsuccessful. On its seven most important policy objectives, the European Union has made no meaningful progress and has even lost in at least two cases. To be sure, more and more official dialogues have been set up. Europe has provided financial support to help China to create a level playing field. Europe has also granted China almost unhampered access to its market while the access of European companies to the Chinese market remains limited. Europe has adhered to free trade, even while China has refused to reciprocate for over two decades. The Chinese leadership has repeatedly vowed to build a win–win partnership. It has even presented itself as a new champion of free trade. But the reality remains different. First of all, there is no win–win partnership with China. For the vast majority of European countries, the impact of China on their economic growth has remained negative. It might be the case that individual European companies make a profit in China, but taking the general interest as a point of departure, which is what governments are meant to do, and evaluating the impact of China on the overall economy, it is just not appropriate to insist that China has been ‘good’ for growth in Europe. Most countries have a persistent deficit on the current account, which includes the trade balance. Altogether, the European Union has directly lost €1.4 trillion to China since 2006, as a result of that protracted deficit. European countries have also lost out to China in third markets. Net technology transfer is usually not to their advantage either. Holslag, Jonathan. The Silk Road Trap (pp. 146-147). Wiley. Kindle Edition.

China and Europe already trade

The Statesman (Pakistan) April 13, 2019, Europe may hold new promise for BRI

This is where China’s front-loading of developed European nations becomes a potent tactic for the BRI, which was originally conceived for developing and least developed countries. It is also important to underline that it is not the US but the EU that remains China’s largest trading partner, with their two-way trade last year reaching US$650 billion – an impressive $1.8 billion a day. This figure can also be seen as being larger than China’s bilateral trade with both the United States and India combined.

Ties with China have hurt Europe economically, they have not helped. This loss undermines the cohesion of the EU.

J Holslag, 2019, onathan Holslag is a Belgian professor, author and policy advisor. Jonathan Holslag is a professor international politics at the Free University of Brussels, where he teaches diplomatic history and international politics, and also lectures on geopolitics at various defence academies in Europe, The Silk Road Trap, page number at end of card
What does all this mean for Europe? First of all, we have to stop claiming that China’s rise has been beneficial to our growth. This is not the case. Second, governments must take the general interest as the point of departure for their engagement with China. In that regard, they might actually learn from China. The success of individual companies is important but has to be put in a broader perspective. They need to understand that the prosperity of their national economy is linked to the prosperity of the EU economy as a whole, that these prosperities are
often being eroded, and that China deliberately complicates the cohesion and the survival of the European Union.
Third, European leaders have to ask themselves what certainty they have that the situation will improve, with or without the cooperation of China, for instance because of the promises related to the Belt and Road.
Europe has tried for over twenty years to rebalance the partnership , but nothing has happened and the result of over two decades of engagement has been a direct loss on the current account of $1.4 trillion pounds. This is an immense amount of capital that could have otherwise been used to boost internal demand for European producers or for investment in our own new industries. For this study, dozens of Chinese documents were reviewed and there is no indication China will work to a more balanced partnership, whatever it promises.

Trade losses to China causes conflict within the European Union

J Holslag, 2019, onathan Holslag is a Belgian professor, author and policy advisor. Jonathan Holslag is a professor international politics at the Free University of Brussels, where he teaches diplomatic history and international politics, and also lectures on geopolitics at various defence academies in Europe, The Silk Road Trap, page number at end of card
Finally, this book challenges the optimistic assertion that members of the Eurozone do not have to worry about national deficits with China, because what matters is the combined current account of all the members, as the monetary union redistributes wealth internally. This might be true in theory for a perfectly functioning monetary union, but in practice this redistribution is not really evident at all, especially when the persistent gap between deficit and surplus countries leads to political sensitivities. The baseline remains that China’s impact on growth is negative, that this could exacerbate the political tensions between the surplus and deficit countries inside the European Union and thus contribute to the weakening of cohesion. We can thus not simply approach the rise of China with rather constricted economic theories, but need to bring the complexity of an imperfect monetary union and political sensitivities into the equation as well. Economics and politics are interrelated. Holslag, Jonathan. The Silk Road Trap (p. 148). Wiley. Kindle Edition.

Importing cheap Chinese products hurts Europe

J Holslag, 2019, onathan Holslag is a Belgian professor, author and policy advisor. Jonathan Holslag is a professor international politics at the Free University of Brussels, where he teaches diplomatic history and international politics, and also lectures on geopolitics at various defence academies in Europe, The Silk Road Trap, page number at end of card
This book also disputes that importing cheap Chinese products is good for European citizens. While it helps repress inflation in the short run, it threatens to render Europe vulnerable to destabilizing adjustment crises in the long run. This book also takes issue with the argument that bilateral deficits are not problematic as long as the overall current account is more or less balanced. Either way, a bilateral deficit remains a deficit and such trade partnerships, as has been asserted, have no positive impact on growth. In addition, many European countries have both a negative bilateral and total deficit on the current account.

Europe will get investment regardless

The Statesman (Pakistan) April 13, 2019, Europe may hold new promise for BRI
The BRI itself is actually no big deal in the sense that there was nothing stopping China from making investments in Italy, or the rest of Europe, before Mr. Xi formally gave a name to the development strategy in 2013. According to a Financial Times article by Mr. Geraci that was published on Friday, along with other sources, Britain over the past 15 years has attracted about 90billion of foreign direct investment from China. Germany has attracted 45-billion and Italy 22-billion. Chinese investors own Italy’s Pirelli, one of the world’s top tire makers and have a big stake in Deutsche Bank. Until recently, Chinese businessmen owned Britain’s Aston Villa and Italy’s AC Milan soccer teams Nor did the lack of BRI prevent China from investing in European ports, some of which are in countries, such as France and Netherlands, that probably will never join the BRI. China’s biggest port investment in Europe, in Piraeus, near Athens, was made in 2016, two years before Greece signed up for the BRI.

China has many trade barriers that block many exports to China, European countries better off trading among themselves until they have a strong enough economic model to compete with China

European Law Blog, June 25, 2019 , The Road that divided the EU: Italy joins China’s Belt and Road Initiative, https://europeanlawblog.eu/2019/06/25/the-road-that-divided-the-eu-italy-joins-chinas-belt-and-road-initiative/
A strategic outlook.[28]’ The European Commission criticizes China for preserving domestic markets from the competition by deploying ‘selective market openings[29]’ as well as providing ‘heavy subsidies to both state-owned and private sector companies etc.[30]’ Furthermore, the Commission clearly objects to the fact that the ‘EU operators have to submit to onerous requirements[31]’ to access the Chinese market. The Commission also emphasizes the lack of reciprocal market access. For instance, while Chinese financial services are rapidly expanding into the EU market, European companies are still denied access to the Chinese market. In this light, the Commission calls for developing ‘a more balanced and reciprocal economic relationship[32]’. In his recent book The Silk Road Trap: How China’s Trade Ambitions Challenge Europe, Jonathan Holslag, a leading expert on Asian affairs, argues that in order to achieve such a relationship ‘the EU must reduce its reliance on China and work on building a stronger and more sustainable European economic model[33]’.

China is not going to let European companies participate in BRI projects run by China’s state owned enterprises

Dezan Shira ; Associates, May 13, 2019, Mondaq Business Briefing, China: The 2019 Belt & Road Forum: What Xi Jinping Actually Said In Terms Of Belt & Road Development & China Market Access (Vide
Chinese statements of intent can be misinterpreted by the West. Op/Ed by Chris Devonshire-Ellis In short, Altmaier misquoted Xi and bigged up what had actually been stated. Why? To enable German and EU politicians to continue to pressurize China to open up its markets. That doesn’t sound unreasonable, although perhaps a little underhand in terms of misquoting China’s President to do so. The problem is with this approach is that it is far too blunt for Chinese tastes, they do not wish to be constantly reminded about opening up their markets to foreign contractors. And make no mistake about it, the EU are largely, in the terms of the Belt & Road, not talking about direct consumer market access, but about the ability of EU contractors to participate specifically in Belt & Road infrastructure projects. It is true that Chinese SOEs have been hoovering up the majority of Belt & Road infrastructure projects. However, the EU also needs a reality check: by definition such projects are bilateral between China and the specific nation concerned. That means they are not fully under China’s remit, there is a secondary sovereign Government involved. By insisting that China opens up the Belt & Road to ‘foreign contractors’, the likes of Altmaier are asking for something that is not within China’s scope to deliver. It is a futile and rather naïve approach. That said, Xi did state in another aspect of his speeches that China was very much open for foreign business. But it seems to me that this aspect of China’s desire to see foreign brands and products in China has largely been ignored, which is frankly bizarre. In terms of having foreign consumer goods and services enter the Chinese market, Xi was far more positive. He explained, “As a Chinese saying goes: ‘The ceaseless inflow of rivers makes the ocean deep’. However, were such inflow to be cut, the ocean, however big, would eventually dry up”. And then to ram the point home still further, said: “We will increase the import of goods and services on an even larger scale. China is both a global factory and a global market. China does not seek trade surplus. We want to import more competitive, quality agricultural products, manufactured goods and services.” Therein lies the problem with the EU’s trade and investment position with China and the Belt & Road. It only caters for a small minority of larger businesses and not the larger volume of its SMEs. This is because the larger engineering, manufacturing, and contracting businesses (and I mention just a handful of German examples in Arubis, BASF, Bayer, BMW, Bosch, Continental, Daimler, Heraeus, Heidelburg Cement, Lanxess, Linde, Saltzgitter, Siemens, ThyssenKrupp, and Volkswagen) are all able to afford to pay for government lobbying. This is fine, but such a position also relies on the likes of Altmaier to take the right position to soften China’s approach and gain some traction. However, this strategy is not working when it comes to the Belt & Road contracts for the reasons I explained: It is not sophisticated enough, and in any event is not purely a Chinese favor to dispense. German and EU businesses looking at making inroads into Belt & Road Initiative projects need a new approach. In terms of the Chinese market, however, Xi was much more bullish, indeed openly stating, “China wants to import more competitive, quality agricultural products, manufactured goods and services.” If anything, that is the take-away from the Belt & Road Forum: China is open for business and wants competition in its markets. Some markets that require government monitoring, such as pharmaceuticals, do have limits and restrictions on how far the foreign investment can be permitted, and this is not entirely unreasonable either. However, pharma, and other currently restricted industries are on the way to be further liberalized. Xi touched on this, and I reiterate: “We will expand market access for foreign investment in more areas, and we will continue to slash the negative list.” The important thing to bear in mind is that the Chinese government is intensively studying their national industries and wish to build up their own global champions before allowing foreign competition. This is not unreasonable when such industry sectors would not be able to compete with imported goods, and this remains the case in certain sectors. It is unreasonable when vested interests start to seek protection from foreign competitors to maintain local market dominance. WTO rules forbid this, and while the Chinese state are aware of abuse, internal political considerations can and does mean some industries remain extremely difficult for foreign businesses to enter. That then is not a trade issue, it is a Chinese internal political issue, and very hard to resolve. Pressure from the likes of Altmaier is not going to be enough, it never has been, and isn’t ever going to be.

Turn – China will employee economic coercion

Katherine Tobin, Hearing Co-Chair, U.S.-CHINA ECONOMIC AND SECURITY REVIEW COMMISSION, January 15, 2018, U.S.-CHINA ECONOMIC AND SECURITY REVIEW COMMISSION HOLDS A HEARING TO ASSESS THE STATUS OF CHINA’S BELT AND ROAD INITIATIVE FIVE YEARS ON, https://www.uscc.gov/sites/default/files/transcripts/Hearing%20Transcript%20-%20January%2025%2C%202018_0.pdf
Perhaps more concerning, Chinese economic engagement could give way to dangerously lopsided bilateral relationships and create opportunities for Beijing to employ greater economic coercion against smaller partner countries.  

Chinese companies get all the benefits from the projects

Nadage Rolland, Senior Fellow for Political and Security Affairs, National Bureau of Asian Research, January 15, 2018, U.S.-CHINA ECONOMIC AND SECURITY REVIEW COMMISSION HOLDS A HEARING TO ASSESS THE STATUS OF CHINA’S BELT AND ROAD INITIATIVE FIVE YEARS ON, https://www.uscc.gov/sites/default/files/transcripts/Hearing%20Transcript%20-%20January%2025%2C%202018_0.pdf
A major challenge is that the BRI label evades classification both geographically, temporally, functionally and I think by design, BRI is really a vision and in some cases a loose brand more than it is a masterplan with strict criteria for inclusion.     Infrastructure is not the only component of the Belt and Road, but it is a major component and it is — I think it is important in that it provides a window into the Belt and Road’s drivers and broader implications, and for the past three years, CSIS has been tracking infrastructure projects across the Eurasian super continent. We have a database of about 2,200 projects, transportation projects that include not only Chinese funded projects, but what others are doing in the region.     And as that database grows, several trends are emerging. I will just note one of them that has I think, both economic and political implications, so one major question about the Belt and Road is its openness, the degree to which others can participate and benefit from it. In our data to date suggests that Chinese projects are less open to local and international participation.    Out of all the contractors participating in Chinese-funded projects within our database, about 89 percent are Chinese companies, about 7 percent are local companies, meaning that they are headquartered in the same country where the project is taking place and about 3 percent are foreign companies, so non-Chinese companies from a country other than the one in which the project was taking place.

The BRI just sustains Europe’s trade deficit with China – Poor business get more loans, sustaining the businesses, and more capital leaves

Jonathan Holslag, 2019, Jonathan Holslag is a Belgian professor, author and policy advisor. Jonathan Holslag is a professor international politics at the Free University of Brussels, where he teaches diplomatic history and international politics, and also lectures on geopolitics at various defence academies in Europe, The Silk Road Trap, page number at end of card
The distributional part is partly concerned with the ability to embed the internal market in the kinds of external relations that support positive entrepreneurship. But it also inevitably leads us to the discussion about the balance of trade and capital flows. The impact of a trade imbalance on economic growth is dealt with at greater length in the next chapter. At this point, it suffices to signal that trade imbalances should not be problematic if they are small and short-term. An economy can safely incur a trade deficit, for instance, as long as the imports help to make it more productive. But if deficits are large and lasting, they are usually followed by destabilizing adjustments, and so the trade deficit with China is a problem and must   be addressed. Unbalanced trade with China has cost Europe over €1.4 trillion, or €1,400 billion, in the last ten years. That is about twice the GDP of the Netherlands. It is difficult to understand how European governments can justify a collective structural deficit of over one hundred billion euros with one country, a hole that has added up to over a trillion euros in the last decade, when they claim to have difficulties finding resources to modernize their own economies, improve education and update their industry. It is even more difficult to understand that European governments tolerate such sustained losses with China and then claim it to be a success if the Chinese government lends some of that money back, primarily to   support the exports of its own companies. How many times have we seen politicians present the attraction of Chinese investment or loans as an indicator of good economic policy? The scramble for Chinese investment seems to have come to mask the lack of smart economic policy.  The main takeaway from this introduction, however, remains that even if the following chapters highlight the failure of Europe to shape the partnership with China to its benefit, stress that the Chinese leadership is not willing to change its policies significantly, and that the new Silk Road is about an even more ambitious political push to penetrate foreign markets Europe should not allow it to be used to preserve our economic situation   as it currently exists. This is what I consider to be the Silk Road Trap. It concerns the risk that Europe will see more of its existing wealth being drained and become more dependent on external debt, and, even more importantly, it concerns the risk of being held back from forging onwards towards a better economy as long as European society is addicted to cheap, resource-guzzling imports instead of spending its wealth on positive entrepreneurship. We need to rebalance trade with China, but we should do so with one clear goal, that is, to build a better economy that permits the next generations of Europeans to live their lives in prosperity, dignity and peace. China can of course work towards its so-called ‘China Dream’, but Europe needs to move on as well, and fight for its own dreams. Holslag, Jonathan. The Silk Road Trap (p. 20). Wiley. Kindle Edition.
CONTINUES… More wealth spent on servicing external debt means less wealth to spend on goods and services produced domestically. And if foreign creditors suddenly refuse to continue to borrow money or pull their money out of the deficit country, the impact on production will be even more severe. Holslag, Jonathan. The Silk Road Trap (p. 42). Wiley. Kindle Edition.

European companies will be blocked from China’s market

Jonathan Holslag, 2019, Jonathan Holslag is a Belgian professor, author and policy advisor. Jonathan Holslag is a professor international politics at the Free University of Brussels, where he teaches diplomatic history and international politics, and also lectures on geopolitics at various defence academies in Europe, The Silk Road Trap, page number at end of card
A fourth goal was to secure fair treatment for European companies in the Chinese market. China’s economy has opened, to be sure, but many restrictions for foreign investors remain in place. The most recent guidelines maintain many sectors as restricted or prohibited to European investors, whereas Chinese investments in Europe face almost no restrictions in the same clusters.23 Table 2.4 summarizes this unbalanced situation. Besides the formal restrictions, there are many informal barriers for European companies. More than half of European companies in China state   that they are treated unfavourably compared to domestic companies. More companies state they feel the investment climate to be less welcoming than indicate that it has improved. Common complaints refer to the buy-local regulation, fiscal pressure to open important intellectual property to the Chinese government, limitations in the pharmaceutical sector, discriminatory national security legislation and discretionary enforcement of regulations.24 In sum: progress on this issue has not been satisfactory. Holslag, Jonathan. The Silk Road Trap (p. 30). Wiley. Kindle Edition.

China-EU trade without BRI

Theodore Pelagidis, April 15, 2019, China’s Back Door to Europe, https://www.brookings.edu/blog/up-front/2019/04/15/chinas-backdoor-to-europe/
At a critical EU-China summit on April 9 in Brussels, European Union (EU) members and China agreed on a road map for specific bilateral trade arrangements aimed at drastically reducing unfair trade practices and subsidies. A possible final trade-related agreement involving the World Trade Organization (WTO) will follow soon. Adjudicated by the WTO, that agreement may satisfy Europeans demanding freer access to China’s protected market for exports and investments

Doesn’t matter – Europe can’t compete on China’s BRI terms

Jason Lemon, March 26, 2019, https://www.newsweek.com/macron-merkel-china-belt-and-road-1375673, MACRON, MERKEL URGE IMPROVED TIES WITH CHINA AS BELT AND ROAD LOOKS MORE LIKELY THAN EVER
European nations are also concerned about what they view as unfair trade practices by China that make it difficult for foreign enterprises to compete fairly. While European leaders believe they have opened their markets wide to Chinese companies, they see China as having been slow to respond in kind.

European companies would not get the BRI deals

Horia Curtin, 2017, A PIVOT TO EUROPE: CHINA’S BELT-AND-ROAD BALANCING ACT, http://ier.gov.ro/wp-content/uploads/publicatii/Final_Policy-Brief-5_Horia-Ciurtin-A-Pivot-to-Europe_web.pdf, Mr Horia Ciurtin is a legal adviser in the field of international investment law and international arbitration; Managing Editor of the EFILA Blog which appears under the auspices of the European Federation for Investment Law and Arbitration (Brussels). He is also an Expert for New Strategy Center (Bucharest), a prominent Romanian think-tank in the field of strategy and international relations. In 2017, he co-founded DAVA | Strategic Analysis, a think-tank providing indepth strategic, cultural and geo-economic analyses.
At the same time, there is a mounting tension at WTO level regarding China’s market economy status. While both the United States and the European Union refused to acknowledge that Beijing’s economy had reached such a level, China filed a complaint against them.48 Thus, despite their own misunderstandings, the two Atlantic partners have held a common ground when it comes to upholding the established rules of the game. Both America and the European Union are firm in defining that a “market economy” is. And they shall not make easy concessions on this topic. Another point of collision – along the path to Europe – is the manner in which China actually deals with local governments. So far, Beijing has not proved itself to be a champion of transparency and strict standards in bidding for infrastructure contracts, often pushing other competitors (even European ones) away from the market through direct negotiations with local strongmen. Offering cheap loans – and the logistics to construct itself the projects – China deployed an elaborate game of masks. At the same time, it acted both as financier and constructor. Thus, without having a solid legal framework providing reliable rules in the field of public procurement, state aid and dispute-settlement, the Belt-and-Road Initiative would be almost useless for European-based companies that are constrained by their domestic rules of business. Without allowing the BRI to become a strictly regulated mechanism, Europe’s investors and private contractors would be in no position to fully benefit from the advertised opportunities. It would simply turn out to be a geo-economic one-man show: China’s fancy project, refashioned as a multilateral platform. 46 See the excellent HCSS Under these circumstances, the European Union needs to tread lightly on the Silk Road. Even though the direct link to China could benefit its constituent economies (especially the export-based ones such as Germany), it could also make it impossible for European companies to compete for projects in the extended neighbourhood. In addition, a reconfiguration of the local business models – already highly deficient – along Chinese lines, could make any EU-based initiative unable to penetrate domestic markets. As Beijing develops an economic dominance in the field of infrastructure, energy and consumer goods along the way, this might potentially add up to the existing entry barriers.