The implications of the Chinese OBOR One Belt One Road concept for the EU

In partnership with: obor-grafic

 

What is “One Belt, One Road” (OBOR)?
Chinese President Xi Jinping announced the “One Belt, One Road” (OBOR) initiative on a visit to Kazakhstan in September 2013. In his speech, Xi put forward the idea of an economic “belt”. In particular, he proposed that “China and Central Asian countries compare notes on their respective economic development strategy and work together to formulate plans and measures for regional cooperation” (Xinhua 2013). One month later in October on a visit to Indonesia, he then added the maritime version (Tiezzi 2015), spanning from China to the Middle East and Africa, concluding in the Mediterranean. Hence, the OBOR initiative consists of two components, a route on land called “Silk Road Economic Belt” (SREB) and a sea-route labelled “Maritime Silk Road” (MSR).

Significance
In total, this initiative will touch around 4.4 billion people in more than 60 countries. The rise of China as a global investor has accelerated since the 2008 Financial Crisis – and OBOR is China’s framework to channel and guide this investments. In an editorial, the South China Morning Post writes that OBOR is the “most significant and far-reaching project the nation has ever put forward, having domestic and foreign policy implications that impact the economy and strategic and diplomatic relations” (South China Morning Post 2015).
As such, OBOR has received substantial media attention both inside and outside of China. Enthusiasts maintain that OBOR is a natural and organic result of China’s political and economic evolution, while the pessimists point out that for all its merits, OBOR will most likely run into heavy problems.
Following this reasoning, European policy-makers and businesses have not paid enough attention to this initiative. What impact does it have on the European strategy and businesses from different sectors? How can European Union political and business actors benefit from this initiative and how can they get involved?

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Research outline

The Research

The research is practically oriented towards understanding the implications for European Union actors and especially businesses wanting to operate or already operating in the countries along OBOR and China proper. Hence, it will touch on several aspects of China’s OBOR initiative including political, economic and legal factors, in particular revolving around but not limited to, the following questions:

  1. What does China’s political and economic fragmentation mean for OBOR?
  2. How are countries integrated into OBOR? How are obstacles in trade or terrorism addressed?
  3. Which international legal norms are diffused along OBOR and how?

What does China’s political and economic fragmentation mean for OBOR?

OBOR has achieved a life of its own, formally being directed from Beijing (the AIIB and the Silk Road fund being primary financial institutions for funding projects along OBOR). However, China’s political and economic fragmentation means that implementation greatly depends on local provincial initiatives to find new ways to support and adapt OBOR.

For example, within one year since OBOR’s inception, nearly every province had issued a report on how it can contribute to it. In June 2014, the South-eastern coastal province of Fujian issued a document solely dedicated to understanding OBOR’s influence and opportunities for Fujian from 2014 to 2020. In July 2015, Shaanxi province published a plan titled “2015 ‘One Belt One Road’ Construction Action Plan” to map out distinct aims and responsibilities for counties and cities (Guangming Daily 2015). The governor of Sichuan province pointed out that OBOR is among his top three priorities. Sichuan encourages the purchase of foreign companies and resources, especially in Russia, India, and Myanmar (People’s Daily 2015). Every province in China has located itself on the belt and road and analysed what benefits it can reap, how it can contribute and what infrastructure (roads, rails, but also business and legal) it needs to develop. This naturally includes the setting up of financial institutions dedicated to OBOR. Thus, a financial magazine (Jinrongjie [Financial Street] 2015) reports that Jiangsu province has established its own local OBOR fund with a capital of 3 billion yuan in 2015 (US$480 million), to be raised to 10 billion yuan by 2017 and 30 billion yuan (US$4.8 billion) by 2020.

The provincial level, however, is still too crude. Many cities and counties have put together own OBOR action plans that entail advantageous financing conditions with local banks, platforms to find local partners, or special subsidies for specific industries.

How are countries integrated into OBOR? How are obstacles in trade or terrorism addressed?

In a speech in front of the whole diplomatic corps in November 2014, Xi Jinping instructed to “actively promote the construction of OBOR” and to search for common interests in cooperation to realize win-win situations (Xinhua 2014). The result is growing interest by nations all over the world. These countries not necessarily are on the original route of the Silk Route. For example, Argentina wants to join OBOR (State Council 2015b). Also, other Latin American countries have expressed interest. Generally, the infrastructure, economic, and social aspects are stressed, as well as how a specific country can contribute to the development of OBOR. The Chinese Ambassador in Belgium, Qu Xing, stressed the importance of Belgium as a logistics hub in Europe and its advantageous geo-political position as well as its flourishing high-technology and education sector (State Council 2015a).

These are but examples from 2015. Since then, OBOR has made inroads in Europe, the Middle East, Southeast Asia, Africa, and the post-Soviet space.

Which international legal norms are diffused along OBOR and how?

Along the OBOR countries, there are dozens of different legal frameworks and cultures. How are international legal norms being chosen, incorporated, and diffused along OBOR? What influence does China’s People’s Supreme Court (SPC) have on this diffusion? On June 16th 2015, the SPC issued a decision called “Opinions of the Supreme People’s Court on the People’s Court Supporting the Construction of ‘One Belt One Road’ by Providing Judicial Services and Guarantees” (Supreme People’s Court 2015). These Opinions covers cross-border criminal, civil and commercial, and maritime as well as free trade zone-related issues. Local courts in cities and provinces are looking to the Supreme Court to provide guidance in many upcoming cases related to OBOR. This is evidenced by the sample cases published on July 7th 2015 involving foreign and local companies. By creating the necessary legal infrastructure, both local and foreign enterprises can better protect their interests.

Through being enacted in the legal infrastructure, legal norms deemed desirable for international cooperation are being internalized within the OBOR framework and are incorporated in judgments. While the adherence to OBOR is conscious and planned, the ruling is still based on norms.

This research project is conducted in cooperation with OB|OR Austria. OB|OR Austria is a consulting start-up based in Vienna, Austria, and focuses on the development of business opportunities for Austrian and German companies in China within the context of “One Belt, One Road”

Selected References:

Guangming Daily. 2015. “Jiang “guqidian” youshi zhuanhua wei “xin qidian” xianshi – Shaanxi “‘yi dai yi lu’ jianshe 2015 nian xingdong jihua” guankui (将“古起点”优势转化为“新起点”现实——陕西《“一带一路”建设2015年行动计划》管窥) [Transforming the “old starting point” into the reality of a “new starting point” – Shaanxi’s “2015 ‘One Belt One Road’ Action Plan” View] “. Guangming Daily. http://news.gmw.cn/2015-07/24/content_16403586.htm.

Jinrongjie [Financial Street]. 2015. “Jiangsu sheli “yi dai yi lu” touzi jijin (江苏设立“一带一路”投资基金) [Jiangsu sets up “One Belt One Road” investment fund].” Jinrongjie [Financial Street]. http://finance.jrj.com.cn/2015/07/18044219523235.shtml.

People’s Daily. 2015. “Sichuan sheng zhengfu gongzuo “bannianbao” chulu “yi dai yi lu” suoding e’xin’yin 20 guo 四川省政府工作半年报出炉 一带一路锁定俄新印20[Sichuan Province government work “half year report” disclosed, “One Belt One Road” locking down Russia, Singapore and India, 20 countries].” People’s Daily Online. http://sc.people.com.cn/n/2015/0718/c345458-25628571.html.

South China Morning Post. 2015. “‘One belt, one road’ initiative will define China’s role as a world leader.” South China Morning Post Accessed 2 April 2015. http://www.scmp.com/comment/insight-opinion/article/1753773/one-belt-one-road-initiative-will-define-chinas-role-world.

State Council. 2015a. “Zhu bilishi dashi Qu Xing: zhongbi zhongou hezuo chengshang qixia (驻比利时大使曲星:中比中欧合作承上启下) [China’s Ambassador to Belgium Qu Xing: China-Belgium cooperation can be a link for China-European cooperation].” State Council News Office. http://www.scio.gov.cn/ztk/wh/slxy/slzf/Document/1439300/1439300.htm.

State Council. 2015b. “A zhu hua dashi: agenting he lamei feichang yuanyi jiaru “yi dai yi lu” (阿驻华大使:阿根廷和拉美非常愿意加入“一带一路”) [Argentinian ambassador to China: Argentina and Latin American countries very willing to join “One Belt One Road”].” State Council News Office. http://www.scio.gov.cn/ztk/wh/slxy/slzf/Document/1438182/1438182.htm.

Supreme People’s Court. 2015. “Renmin fayuan wei “yi dai yi lu” jianshe tigong sifa fuwu he baozhang de dianxing anli 人民法院为“一带一路”建设提供司法服务和保障的典型案例 [Typical Cases of People’s Courts provided for the establishment and judicial service and guarantee of “One Belt One Road”].” Supreme People’s Court, Last Modified 7 July 2015 Accessed 29 August 2016. http://www.court.gov.cn/zixun-xiangqing-14897.html.

Tiezzi, Shannon. 2015. “Indonesia, China Seal ‘Maritime Partnership’.” The Diplomat. http://thediplomat.com/2015/03/indonesia-china-seal-maritime-partnership/.

Xinhua. 2013. “Xi suggests China, C. Asia build Silk Road economic belt.” Xinhuanet. http://news.xinhuanet.com/english/china/2013-09/07/c_132700695.htm.

Xinhua. 2014. “Xi Jinping chuxi zhongyang waishi gongzuo huiyi bing fabiao zhongyao jianghua (习近平出席中央外事工作会议并发表重要讲话) [Important speech delivered by Xi Jinping at the Central Foreign Affairs Work Conference].” Xinhua. http://news.xinhuanet.com/politics/2014-11/29/c_1113457723.htm.

 

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Research team

Jean Christopher Mittelstaedt leads the research project. Jean Christopher graduated with a Bachelor of Laws in International Politics from Peking University, Beijing, China. After obtaining a Master in Human Rights and Humanitarian Action from Sciences Po Paris, he now pursues a DPhil in Politics at the University of Oxford, where he focuses on Chinese ideology, the legislative process, and Partybuilding. He is the co-founder of WeBuildEurope.eu as well as the founder of OB|OR Austria Consulting, which specializes in political and risk analysis for companies that invest within China and along the Silk road in Central Asia and Eastern Europe. He is a contributing member of the European-Chinese Law Association and the Austrian-Chinese Business Association.