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Many in Beijing read this as an effort to contain China by expanding U. At the same time, China was motivated to boost global economic links to its western regions, which historically have been neglected. More broadly, Chinese leaders are determined to restructure the economy to avoid the so-called middle-income trap. In this scenario, which has plagued close to 90 percent of middle-income countries since , wages go up and quality of life improves as low-skilled manufacturing rises, but countries struggle to then shift to producing higher-value goods and services.

Zhang Yunling of the Chinese Academy of Social Sciences, a state-backed think tank, argues that the BRI will offer new import and export options, creating new production chains that will spur the development of the Chinese economy. While several developing countries in need of new roads, railways, ports, and other infrastructure have welcomed BRI investments, the initiative has also stoked opposition. For some countries that take on large amounts of debt to fund the necessary infrastructure, BRI money is seen as a potential poisoned chalice.

Some BRI investments have required the use of Chinese firms and their bidding processes have lacked transparency. As a result, contractors have inflated costs, leading to canceled projects and political pushback. Examples of such criticisms abound.

Top 10 Economies of Europe 2019 ( by Nominal GDP )

In Malaysia, Mahathir bin Mohamad, elected prime minister in , campaigned against overpriced BRI initiatives, which he claimed were partially re-directed to funds controlled by his predecessor. In , as debts to China began to weigh on its economy, Pakistan sought billions of dollars in loans from Saudi Arabia, the International Monetary Fund, and China. Arguments against the BRI have in some cases helped propel politicians across the region into office. Political backlash is perhaps less of a concern in authoritarian countries taking part in the BRI, where autocrats face less public scrutiny and where the Chinese model of governance might hold more appeal.

But some governments, in places such as Kenya and Zambia, are carefully studying BRI investments before they sign up, and candidates in Malaysia have explicitly run—and won—campaigns on anti-BRI platforms. Developing the economies of South and Central Asia is a longstanding U.

A presence farther east: Can Europe play a strategic role in the Asia-Pacific region?

It also spent billions of dollars on roads and energy projects in Afghanistan and used its diplomatic muscle to help craft new regional cooperation frameworks to foster Central Asian economic links. The Trump administration has pursued a more confrontational strategy in the region. Some analysts have called on the United States to respond by deepening its own ties with Asian partners, as the Obama administration tried to do with the Trans-Pacific Partnership , a deal rejected by Trump in favor of seeking to strengthen relationships on a bilateral basis.

Jonathan E. Bush administration, U. Yet, despite U. The Trump administration creates a dilemma for the European Union in multiple ways. For example, a more effective investment agreement is required.

Commentary: Brexit is bringing the UK back to Southeast Asia. Will Asian countries buy it?

Ongoing EU-China negotiations for the investment agreement must reach consensus in key areas — providing a level playing field for investors as well as creating transparent and licensing process for foreign investment. An agreement must work for both sides, particularly as a response to emerging Chinese economic clout in the EU, easing EU suspicions. China has become a capital exporter since Such an investment agreement must also play a role in avoiding negative consequences that followed the EU investment-screening framework approved by the European Council in March, which concluded the legislative process.

In that regard, member states and the European Commission consider whether a foreign investor is controlled directly or indirectly by the government of a third country.


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Realistically, a common framework on screening is hard to achieve. Current screening, at most, asks member states for voluntary reporting to Brussels about proposed investments, but lacks enforcement. Not all of the EU member states have national screening systems, not to mention the varying stances on welcoming foreign investment. Also, administrative resources for screenings are costly.

Increased compliance costs could lead to uncertainty and delays for acquiring firms. Given the fact that such a mechanism could pose negative consequences for both authorities and private firms, an EU-China investment agreement is perhaps the better alternative. Such an agreement enables the EU to pursue a more open, transparent and secure environment for capital inflow, reaching more Chinese markets for capital outflow, and China can enter the Europe with fewer barriers and enjoy vibrant foreign capital to stimulate the domestic economy.

The aim of such a rules-based agreement is to create a more conducive environment for capital flows.

Europe’s search for a China strategy | East Asia Forum

Europe and China, with strong codependency, will not end their marriage on trade and sectoral cooperation. They are reviewing and adding more rules for a new paradigm to make the relationship stable and sustainable. Her research interests include East Asia economic strategies, international institutions, and the world order. For many observers, the overriding impression of the EU, in the Summer of , was that of a political experiment failing. For many observers in Europe and beyond, the overriding impression of the EU, in the summer of , was that of a political experiment failing rather than succeeding, of a continent united in name rather than in practice and of a European Union in crisis.

While Britain has long been recognised as an awkward partner in the EU, the first-ever withdrawal of a member state from the EU would be a huge upheaval and a further sign of crisis and decline.

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To complicate matters further, in addition to the EU, some of its member states also faced the possibility of disintegration, with both separatist political parties gaining ground in important regions, such as Scotland and Catalonia. However, while this image of a European Union in crisis resonates in the light of these experiences, it is not entirely accurate. The European Single Market continues to function well, constituting the largest internal market in the world.

The EU also leads the world with regard to trade and foreign direct investment, and it is in the process of negotiating trade and investment agreements with numerous economic partners around the globe, including the US and China. The EU has been at the forefront of the push for a global agreement to limit CO2 emissions and combat climate change, and for a long time, it has been the biggest donor of development aid in the world.

And while the EU has generally failed to create a zone of peace and stability in its neighbourhood, it has at least banished violent conflict within its own territory. EU trade, investment and association agreements with Asia regularly include references to good governance, the rule of law and respect for international agreement. At its inception, the EU was a political rather than an economic project.

Its essence was the search for lasting reconciliation between France and Germany. Market integration and the creation of supranational institutions were the means towards this wider goal, rather than an end in themselves. The award of the Nobel Peace Prize to the EU, in , was a reminder of this original and underlying purpose of the integration process—an achievement that is often forgotten in the context of economic crisis, political turmoil and regional instability. This necessarily brief discussion of the current state of the European Union sketches out the foundations on which its relations with Asia have to be conducted.

It demonstrates the critical state in which the EU finds itself in the early stages of the 21st century and the problems it faces regardless of past achievements. It also highlights the difficulties of prioritising a concerted effort to develop better relations with Asia, despite the significance of that region for Europe and for global governance more generally.

The previous discussion has demonstrated the preoccupation in Europe with internal problems and conflicts in its neighbourhood. More specifically, these preoccupations risk marginalising the development of stronger relations with Asia, despite the efforts that have been set in motion in past decades. However, with the rising economic and geopolitical importance of Asia since the s, the EU has responded to the shifts in global tectonics and, over the past 20 years, has developed closer ties with partners in Asia.

This includes both partnerships with individual countries and multilateral arrangements with regional groupings. At the top, the strategic partnership foresees regular summit meetings between the political leadership of both sides. In the case of the EU-China strategic partnership, there are, for example, more than 40 such dialogue venues active. While the substance of each such partnership depends on the country involved, there are common formats and elements. The dialogue architecture can be more or less extensive and, in some cases, goes beyond that into legally binding agreements.

For the EU, the purpose of this policy of institutionalising relations in such a manner is to ensure that there is more to the partnership than purely economic relations.

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As a result, EU trade, investment and association agreement regularly include references to good governance, the rule of law and respect for international agreement. Beyond its reliance on bilateral agreements, the EU has put the emphasis on multilateral diplomacy with Asia. It has a long track record of cooperation with the Association of Southeast Asian Nations ASEAN , which is often regarded as the most far-reaching example of regional cooperation outside Europe.


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  4. The EU has been supporting the institutions of ASEAN with financial assistance and technical advice, and group-to-group relations between the two blocs have been traditionally strong. In , there had been an attempt to negotiate an EU-ASEAN Free Trade Agreement, but it faltered on the inability of ASEAN as an organisation to legally commit its member states to international obligations—a sign that there are limitations to the symmetry between institutional capacity on the two sides.

    It is a comprehensive approach involving more than 50 countries across both continents, including not only the member states of the EU and ASEAN but also a large number of additional countries in both regions. Indeed, one of the challenges for ASEM is its popularity, with new applications for membership arriving on a regular basis and the overall number of members making interaction increasingly cumbersome as well as creating significant administrative burdens and logistical challenges for smaller states that chair meetings and host events. At any one time, two countries—one European, one Asian—share the chairing role, and the hosting of summits and ministerial meetings alternates between Europe and Asia.

    In the beginning of ASEM, political dialogue was the key element in the process, but as ASEM grew in size and importance, more emphasis was placed on developing the economic and social pillar as well. The creation of the Asian Infrastructure Investment Bank constitutes a broader challenge to what China regards as us-dominated institutions of global economic governance, such as the IMF and the World Bank.

    However, that criticism ignores both the long-term objectives of the EU in engaging with groups of third countries as well as the nature of such diplomacy, which is more about building trust and raising awareness than being goal-oriented. While many of these initiatives for institutional cooperation have come either from Europe or from Southeast Asia, China has also been active in terms of institution-building.

    The fact that not only many countries across the Asia-Pacific region, including traditional US allies, such as Australia, New Zealand and South Korea, but also most of the EU member states decided to join the AIIB demonstrates the attraction that Chinese-led, multilateral institutions hold in the context of regional and global economic governance. And it demonstrates the importance that EU member states attach to being part of this development, even at the risk of disagreement with their traditional ally in North America.

    Political overview

    Through these various mechanisms, the EU has developed a strong presence in Asia. In any case, the institutionalisation of inter-regional relations, as described here, does provide a strong foundation for the EU on which to engage with the key players in the Asian region across a range of issues, be it economic, security or societal. However, the wide-ranging efforts with which the EU seeks to engage Asian partners on multiple levels also have to confront a number of challenges.