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Report on Infrastructure and Investment:
the One Belt One Road Initiative
and the launch of the Asian Infrastructure Investment
Bank (AIIB)
EuropeanEconomicandSocialCommi1ee
Rapporteur: Stefano Palmieri Expert: Marco Celi
ROUND TABLE: EU – CHINA Bruxelles May19th-20th, 2016
1) FRESH PROSPECTS FOR RELATIONS BETWEEN THE EUROPEAN UNION AND THE PEOPLE'S REPUBLIC OF CHINA 2) THE EU’S STRATEGIC INVESTMENT PLAN 3) THE ONE BELT ONE ROAD INITIATIVE AND THE ASIAN INVESTMENT INFRASTRUCTURE BANK 4) SOME CRITICAL POINTS AND OPPORTUNITIES
FRESH PROSPECTS FOR RELATIONS BETWEEN THE EUROPEAN UNION AND THE PEOPLE'S REPUBLIC OF CHINA
....the way forward 2015 marked the 40th anniversary of diplomatic relations between the
EU and the PRC
The EU-RPC cooperation pillars
EUROPE 2020
EU-China strategic partnership
13th FIVE-YEARS PLAN
EU-China 2020 Strategic Agenda for Cooperation
Civil society cooperation
“…...the groundwork has been laid to change challenges into opportunities for development and cohesion using a win-win approach”
The EU – RPC cooperation : when geopolitical meets geoeconomics
• The EU's Strategic Investment Plan (Juncker Plan)
• The European Fund for Strategic Investments (EFSI)
• The One Belt One Road (OBOR) initiative
• The Silk Road Fund • The Asian Infrastructure
Investment Bank (AIIB)
THE EU – CHINA BILATERAL INVESTMENT AGREEMENT
THE EU’S STRATEGIC INVESTMENT PLAN
Recent investment trend in the EU (Real gross fixed capital formation – EU 28 – 2013 prices – Eur Billions)
Source: European Commission 2015
Factsheet 1 WHY DOES THE EU NEED AN INVESTMENT PLAN?
Since the global economic and financial crisis, the EU has been suffering from low levels of investment. Collective and coordinated efforts at European level are needed to reverse this downward trend and put Europe firmly on the path of economic recovery.
What is the current investment situation?
The European Commission's most recent economic forecasts showed that weak investment has led to a fragile recovery from the economic crisis in the EU and even more so in the euro area. While Gross Domestic Product (GDP) and private consumption in the EU were in the second quarter of 2014 roughly at the same level as in 2007, total investment was about 15% below 2007 figures. In certain Member States, the decline in investment has been even more dramatic.
Compared to the 2007 peak, investments have dropped by around € 430 billion. Five Member States (France, the United Kingdom, Greece, Italy and Spain) account for around 75% of the drop, owing to the size of their economy or the sheer magnitude of the investment drop, or both.
Real gross fixed capital formation by Member State Index 2007=100
Prolonged deep decline
Member States with biggest drop in investmentE.g., Greece, Ireland, Italy, Portugal, Spain
Shallower double dip (except UK)
Other selected Member States E.g., Belgium, Finland, Germany, Netherlands, UK
Real gross fixed capital formation EU-28, in 2013 prices, € bn
Share of total drop by country EU-28, in percentage*
Share of total drop by sector EU-26, in percentage*
Machinery and equipment (32%) and other (-9%)
Real estate – Non-residential
Real estate – Residential
AN INVESTMENT PLAN FOR EUROPE
The Investment Plan for Europe is based on three strands, which are mutually reinforcing. First, mobilising sources of investment finance to deliver at least € 315 billion of additional investment over the next three years, and making better use of public money to attract private investors. Second, making sure this extra finance contributes to growth in ways that are adapted to each sector and geography. And third, measures to improve the investment environment in Europe and thereby trigger knock-on effects.
An Investment Plan for Europe: Three Strands
The Investment Plan for Europe has three objectives: to provide additional fuel to the EU's recovery and reverse the drop in investment; to take a decisive step towards meeting the long-term needs of our economy by boosting competitiveness in strategic areas; and to strengthen the European dimension of our knowledge, human capital and physical infrastructure, and the interconnections that are vital to our Single Market.
According to European Commission estimations, the Investment Plan has the potential to add €330 to €410 billion to the EU's GDP and create 1 to 1.3 million new jobs in the coming three years.
Factsheet 2 WHERE DOES THE MONEY COME FROM?
The Investment Plan for Europe will be a package of measures to unlock public and private investments in the real economy of at least € 315 billion over the next three years (2015-2017). The Investment Plan consists of three strands: (1) mobilising investment finance without creating new public debt; (2) supporting projects and investments in key areas such as infrastructure, education, research and innovation and (3) removing sector-specific and other financial and non-financial barriers to investment.
Mobilising the € 315 billion additional finance for investment at EU level is a joint effort between the European Commission and the European Investment Bank (EIB). Member States, National Promotional Banks, regional authorities and private investors will all be encouraged to contribute. Here is how:
A new European Fund for Strategic Investments (EFSI)
MOBILISING FINANCE FOR INVESTMENT MAKING FINANCE REACH THE REAL ECONOMY
IMPROVED INVESTMENT ENVIRONMENT
A NEW EUROPEAN FUND FOR STRATEGIC INVESTMENTS - EFSI
THE ONE BELT ONE ROAD INITIATIVE
THE OBOR INITIATIVE
METHODOLOGY APPROACH: • The bilateral approach:
State by State
• The Multilateral approach: – European Union – Cooperation between
China and Central and Eastern Europeans Countries
– EURASIAN Economic Union
The OBOR Initiative
FINANCIAL SOURCES: Chinese Institutions: • New Silk Road Fund (SRF) • China Development Bank • China Exim-Bank Other financial institutions: • The Asian Infrastructure
Investment Bank (AIIB) • BRICS New Development
Bank Maritime Silk Road Fund Management Center
Asian Infrastructure Investment Bank (AIIB)
What & Why AIIB is the first international financial institute in which PRC is both leading economic system and principal shareholder. Through the new bank the PRC intends supporting the introduction of a multipolar financial and currency system able to strenght the resilience of system.
How & Who Unlike other, similar initiatives, such as the New Development Bank (NDB) , which was set up by the BRICS, the PRC has asked other countries to be founding members of the AIIB without any prerequisites. While for Asian countries this provides an opportunity to take an active part in the decision-making process on investments which will reduce their infrastructure deficit, for European countries joining the AIIB is seen as an opportunity to tap into the major infrastructure market which will be developing in Asia in the coming years by winning tenders and subcontracting contracts for their own companies. Since march 2015 fourteen EU’s member states accepted the PRC's invitation to join the AIIB (United Kingdom, France, Italy, Germany, Austria, Denmark, Finland, Luxembourg, Malta, Netherlands, Poland, Spain, Sweden and Portugal.
CONCLUSIONS
• The EU's Strategic Investment Plan
• ESIF
• The One Belt One Road (OBOR) initiative
• The Silk Road Fund • AIIB
“Must be tackled together in order to establish an integrated framework of challenges, objectives and opportunities with a view to achieving social and economic results beneficial to civil society”
CONCLUSIONS 1/6
• The EU's Strategic Investment Plan
• EFSI
• The One Belt One Road (OBOR) initiative
• The Silk Road Fund • AIIB
• “the direct participation of Member States in the AIIB and the entry of the CHINA into the EFSI provide an opportunity to uphold principles which are crucial to civil society: compliance with EU standards in public procurement, environmental protection, human rights, and labour and social protection”
CONCLUSIONS 2/6
• “Civil society must therefore be assured that it will be able to monitor, assess and implement action planned in connection with OBOR and the EFSI using an appropriate set of economic, social and environmental indicators at national, regional and local level”
“At the EU level the OBOR joint strategy needs to be reinforced, so that the pursuit of specific interests by individual Member States does not result in criticism and obstacles to European economic and social cohesion and relations between the EU and the PRC”
CONCLUSIONS 3/6
• “would also point out that the absence of a clear and coordinated EU stance on the AIIB has not allowed for the planning and implementation of a common strategy, which would certainly have been useful for harnessing the EU's interests to those of the individual Member States”.
CONCLUSIONI 4/6
“The negotiation process, must guarantee optimum transparency regarding the documents on the table”
CONCLUSIONS 5/6
THE EU – CHINA BILATERAL INVESTMENT AGREEMENT
“Throughout this process, the civil society organisations of both parties must be directly involved (the EESC’s EU-China Round Table can play a key role here), promoting cross-sector dialogue and guaranteeing broader social partner involvement. Social dialogue and collective bargaining, which are part of the EU's social acquis, must be promoted as best practice (REX 410)”
“The bilateral investment agreement must include a specific chapter on sustainable development based on environmental protection, combating climate change, the promotion of decent work, health and safety in the workplace, and all the issues covered by the ILO's fundamental conventions and key environmental conventions (REX 410)”
• With regard to the strategic role to be played by labour in the EU's strategic investment plan and the OBOR initiative, the EESC reiterates that it is ready and willing to organise a conference on labour rights in the EU and China, with the European Parliament, the European Commission, the European External Action Service and Universities;
CONCLUSIONI 6/6
• The main economic actors (such as small and medium-sized enterprises and social enterprises), social actors (such as trade unions and NGOs) and civil society actors (such as consumer associations) in the EU and the PRC must be guaranteed continuous support to ensure that they are in the driving seat of economically, socially and environmentally sustainable development in the EU and the PRC.
