BEIJING (REUTERS, BLOOMBERG) – China’s Belt and Road Initiative (BRI), an infrastructure development and investment plan aiming to connect Europe with Asia, is sidelining European companies and Brussels should review its competition law to level the playing field, a business lobby said on Thursday (Jan 16).
Opaque procurement processes and the dominance of giant state-owned Chinese companies mean European companies only get “crumbs from the table,” the European Chamber of Commerce in China said in a report.
The European Union (EU) should move to force Chinese companies that access the EU procurement market to operate under the same restrictions that EU companies do in China, it added.
“If the EU fails to play an active and competitive role, there is a real danger that it could eventually become little more than a peripheral market tacked on to the end of Eurasia,” the report said.
European companies are merely “niche players” in the BRI, with just 20 chamber members of 132 survey respondents reporting that they had bid on BRI projects, the chamber president Joerg Wuttke told reporters on Monday ahead of the report’s release.
China has launched construction projects across more than 60 countries since 2013, seeking a network of land and sea links with Southeast Asia, Central Asia, the Middle East, Europe and Africa.
Those European companies that did get involved did so mainly through Chinese business partners or the government, and usually their role was to provide specific technologies or expertise that the Chinese side lacked, the report said.
Chinese national champions were also gaining “monopolistic power” in some BRI countries by building digital infrastructure that involved complete packages of software and hardware based on Chinese standards.
Such companies benefited from heavy state support at home, which helped them beat international competitors.
“Smaller, less developed countries that do not have the capacity for setting their own standards will certainly be put under considerable pressure to simply adopt Chinese standards,” the report said.
The EU needed to allow its own companies to scale up by reviewing its competition law, it said. The EU’s own infrastructure initiative, the “Connectivity Strategy,” should also be prioritised as a “credible alternative” to the BRI.
The Chinese foreign ministry did not immediately respond to a request for comment.
The report comes as BRI, Chinese President Xi Jinping’s signature initiative, has attempted to clean up its image after criticism that it’s a debt trap for poor countries and allegations of corruption.
China’s government clearly took note of some negative perceptions of the BRI during the initiative’s first half decade and “took corrective action,” the report said. Roughly a quarter of all respondents indicated that the BRI was changing, trending toward improvement rather than worsening across various aspects of the initiative.
Italy became the first Group of Seven country to sign up for BRI last March. As of June, China had established third-party market cooperation mechanisms with 14 developed countries including France and Japan. Third-party market cooperation – signing up a developed nation to help build infrastructure in a Belt and Road countries – is the focus of the next phase of BRI to de-politicize the project and bring in more stakeholders, Bloomberg reported.
The cooperation paper is chiefly a political declaration by two governments, Wuttke said. In terms of business, “it has yet to produce any new opportunities for that country’s companies, and hasn’t driven the openness, transparency and accountability that we enjoy in multilateral finance schemes or schemes run by OECD member countries like Japan,” he said.