China's 'Belt and Road' initiative and the EU's 'Juncker Plan'
- By John Ross
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E-mail China.org.cn, January 16, 2016
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A strong support [By Zhai Haijun/China.org.cn] |
Significant openings are now being created for both China and Europe by convergence of the EU's "Juncker Plan" for increasing infrastructure investment and China's "Belt and Road" initiative. This convergence was emphasized on the EU side during a trip to Beijing by Jyrki Katainen, EU Commission Vice-President in charge of jobs, growth, investment and competitiveness. China and the EU established a joint working group to develop this, and other forms of cooperation, which includes experts from the EU Commission and the Silk Road Fund, a $40-billion fund established last year to support China's "Belt and Road" infrastructure policy across Asia.
There are two interrelated major aspects to this development. The first is the practical importance of infrastructure cooperation. The second is the way it illustrates China's increasing role in what is termed in the West "thought leadership" - that is in determining the global economic policy agenda.
The contrast between China and the EU's economic performance since the beginning of the international financial crisis is clear. In eight years between the 3rd quarter of 2007 and the 3rd quarter of 2015 EU GDP expanded by a total 2.7 percent - an annual average 0.4 percent. In the same period China's GDP grew by 88.8 percent - an annual average 8.3 percent growth. China's economy grew twenty times as fast as the EU.
There is no mystery as to the reason for the different economic performances. From 2007 to 2014, the latest available annual data, all major components of EU GDP increased except for fixed investment - which remained 12 percent below its 2007 level. In the same period China's fixed investment rose by 110 percent. While the EU underwent economic stagnation due to falling investment China's economy grew rapidly due to its growth.
The Juncker Plan attempts to tackle this EU problem. Its aim is to create €315 billion of new investment - largely of infrastructure focussing on transport, communications and clean energy. A key background to this is that prominent Western economic analysts, such as former U.S. Treasury Secretary Laurence Summers and Martin Wolf, the chief economics commentator of the Financial Times, had argued that infrastructure investment is key to break out of slow Western growth following the financial crisis. The Juncker Plan was the first major step by the EU in this direction.
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