sign in sign up
<<
Home , Belt and Road Initiative

1 questions. critical parliament raised of 2019. members March 23 Dutch Even on to visit Jinping’s Xi state President Chinese during MoU this signed eventually government Italian the States, United the and within from opposition Despite different. was (BRI), Initiative and Road Belt the strategy, diplomacy economic grand of ’s construction the jointly advance to an MoU sign to intent government’s Italian Yet the of avisit. output practical some home back showcase to in order Chinese the by requested meetings, of official outcomes harmless rather considered been mostly have MoUs Such months. in recent Europe in have been they as of debate subject the been MoUs have Chinese before Never April 2019 (in Dutch), available available Dutch), 2019 (in April programme investment Road and Belt China’s join to intention Italy’s about Helvert Van and Berg den Van Amhaouch, members by questions to Answers Netherlands, the of Affairs Foreign of Ministry see agreements; EU to committed remain states member as long as unity, EU undermine necessarily not do China and states member EU between MoUs bilateral that stated and Italy condemn to refused In its soothing response, the Dutch government government Dutch the response, soothing its In potential for such cooperation. for such potential real the test to required is to up follow commitment Significant and businesses. banks Chinese with ties cooperative forge to atool be can MoUs priorities, Chinese with align one’s to priorities not own taken be should care While engagement. conditional ’s of from approach drawn be should inspiration that proposes Brief Policy Clingendael this China, with of MoUs and challenges of opportunities balance the discuss Europeans As sort. of some for cooperation of intent letters such sign to counterparts Chinese by asked regularly –are organs Nations many– including United institutions and international think tanks Governments, known. well is entities foreign with relations in its (MoUs) of understanding China’s for memorandums fondness China’s Belt and Road Initiative Road and China’s Belt Engaging not but endorsing 2019 MAY online . 1 , 2 Union European for anew other, a proposal rival. asystemic as also but partner, outlook One, in Europe. China’s on debate influence growing for the 2019, in March input as meant Commission European the by published documents two by symbolised is This of Europe. many parts in recently China have on hardened views of China’s Second, approval BRI. stamp arubber- constitute MoUs the as China, for value symbolic its to adds This sign. to country member G7 first the is Italy First, out. in 2015.back stand Two differences China with an MoU such –signed Hungary and –including Europe and Eastern in Central countries afew than more all, After MoU? BRI so-called signing of this Italy’s surrounding fuss all the there is Why why the fuss? MoU withItaly’s China: BRI outlook’, 12 March 2019, available 2019, available 12 March outlook’, Astrategic ‘EU–China: Council, European the to and HR/VP contribution contribution andEuropean Commission HR/VP , labels China not just as a strategic astrategic as just China not , labels EU–China: A strategic Astrategic EU–China: online 2 . The The

Maaike Okano-Heijmans & Tomoki Kamo Policy Brief Clingendael Policy Brief

(EU) industrial policy,3 sets out to strengthen can be expected to behave in cases of power Europe’s tools for dealing with the challenges asymmetry. However, the consequences of while reaping the opportunities stemming aligning one’s priorities with China should act from China. This includes measures to create as a note of caution for the enthusiasm with a European investment screening mechanism which governments sign a BRI MoU. After all, (now being implemented), as well as steps such MoUs hold significant symbolic value to deal better with government subsidies and for the Chinese side. update the export controls regime (which are in an earlier phase of development). So the real question is: can governments and other stakeholders engage with China’s BRI The chagrin of many in about without endorsing it in full? Here, Europeans indi­vidual EU member states signing BRI stand to benefit from a closer look at Japan’s MoUs lies in the MoUs’ potential to align experience and policies in this regard. After these countries’ priorities with those of all, the Japanese government has walked the China. This potentially undermines EU unity fine line with China between cooperation and cooperation, for instance when the and resistance for many years longer than EU is negotiating a trade deal with China. Europe. Fundamentally, Tokyo has been Fundamentally a letter of intent, the Chinese consistent in its attempts to engage China side will often try to turn an MoU into a – but on its own terms. concrete commitment when it suits them, and ignore it when it does not. As such, MoUs often benefit China much more than Japan’s conditional engagement they benefit other countries. The common understanding of the BRI in Importantly, the debate in Europe on BRI the Japanese academic community and MoUs (mostly with potential recipient government is that it is a diplomatic strategy countries of Chinese infrastructure projects) initiative of the Chinese government, while should be matched by more discussion on at the same time the slogan of an order that another set of MoUs being advanced by establishes ’s political authority. the Chinese government with advanced The Japanese government therefore deems it economies: MoUs for business cooperation unnecessary to express support for the BRI. with Chinese companies in third countries. These have received much less attention, but Set against this background, the Japanese important lessons may be drawn from these government’s evaluation of the BRI and its MoUs as well. policy regarding cooperation with it are formulated in wordings that have been carefully considered. Japanese Prime Symbolic importance to China Minister Shinzo Abe’s conditional support for China’s initiative at the 22nd International Several of the seventeen Central and Eastern Conference on the Future of Asia, held in European countries engaging with China Tokyo in June 2017, illustrates this. Abe then under the (now) 17+1 Framework can attest recognised the BRI as having the potential to this: all have signed MoUs, but Chinese to connect East and West as well as the promises often remain unfulfilled. Poland, diverse regions found in between. At the for example, is highly disappointed with the same time, he proposed several principles slow and ineffective progress of bilateral regarding cooperation with the BRI. First, cooperation within the framework. Yet the infrastructure should be open for use by all, Chinese government’s behaviour should be and be developed through procurement that no surprise; this is how more-powerful actors is transparent and fair. Furthermore, projects should be economically viable, financed by debt that can be repaid and not harm the 3 European Political Strategy Centre, EU industrial soundness of the debtor nation’s finances. policy after Siemens–Alstom: Finding a new balance Prime Minister Abe added his expectation between openness and protection, March 2019, that the BRI would fully incorporate such a available online. common frame of thinking, be in harmony

2 Clingendael Policy Brief

with the free and fair trans-Pacific economic on collaboration in third countries, with zone, as well as contribute to the peace and Africa as the prime continent. prosperity of the region and the world. Thus, while recognising the BRI’s potential, the On the occasion of Chinese Premier Li Japanese government set clear conditions Keqiang’s visit to the Netherlands in October for lending support to the initiative, and 2018, China’s Ministry of Commerce and at the same time outlined the necessary the Dutch Ministry of Foreign Affairs signed requirements for Japan’s engagement with it. an MoU on strengthening cooperation in third markets. According to the MoU, the two parties will establish a working group Europe’s other MoUs: to support and promote the two countries’ third market cooperation enterprises to conduct cooperation in a third-party market. While the MoU does not mention the BRI, it does include EU In Europe, Chinese Premier had ‘connectivity speak’ in stating that projects called for ‘trilateral cooperation’ between under this MoU should be economically, European and Chinese companies on the environmentally and socially sustainable, sidelines of the EU–China summit in 2015. with high standards of transparency and Although the language has changed since good governance. then, the objective still stands, and several practical steps towards this end have been Although the Chinese government’s push taken, with varying and oftentimes unknown for MoUs with a diverse set of European outcomes. actors is evident, real follow-up and, hence, practical successes are more difficult to find. At the EU level, the EU–China Connectivity For example, as of May 2019, no follow-up Platform was initiated in 2015 and the has been given to the China–Netherlands EU–China Co-Investment Fund was signed MoU. Even the working group has yet to between the European Investment Bank (EIB) be established. Does this suggest work in and the Fund. Since then, both sides progress? Hardly so. More likely, it signals have discussed the coordination of projects a lack of interest, ability and opportunity (especially in Central and Eastern Europe), perceived by both sides. While the limitations transparency (of planning and contracts) imposed by the sheer (market-based) reality and possible cooperation in the Connectivity on the ground may explain the hesitation of Platform – with limited success. In the eyes of the Dutch government to adopt a facilitative European officials, China is still not ready to role, it also suggests failure on the Dutch connect on project finance regulation. side to consider this as an opportunity to engage Chinese players on the ground. By Separately, several European players have contrast, as discussed below, the Japanese signed bilateral MoUs with China. Most government has acted on the opportunity, remarkable among these may be the MoU albeit with disappointing results. between Germany’s Siemens and China’s Belt and Road Construction Promotion Center, which was signed in the presence MoUs as tools to strengthen of Germany’s Chancellor economic relations? and China’s President Xi in 2017. This business-to-government MoU focuses on the application of digital technologies for the The Japanese government believes that it is BRI. Several European governments have important in Japan’s foreign policy towards also signed MoUs for economic cooperation China to strengthen economic relations in third markets. In September 2018, for and to separate the economy from politics. example, Italy’s Ministry for Economic It wants to create a mechanism that prevents Development (MISE) and the Chinese the deterioration of political relations National Commission for Development from affecting economic relations. Tokyo and Reforms (NDRC) signed an MoU thinks that signing an MoU will deepen the integration of economic relations. By signing

3 Clingendael Policy Brief

a ‘third countries business cooperation MoU’ Japanese companies Itochu and Hitachi (like the China-Netherlands MoU) Tokyo has to back out of the team led by the Thai shown that countries need not sign up to conglomerate CP Group, which also included the BRI to cooperate with China. Also, Japan Construction.5 The commercial has shown that a ‘BRI MoU’ (like the one viability of the costly high-speed railway signed between Italy and China) and ‘third was in doubt because of weak forecasts for countries business cooperation’ are different demand, and most of that burden was to be things – even if the Chinese government and shouldered by the private sector. the most likely consider them to be two of a kind. In terms of outcomes, Japan’s ‘third country cooperation MoU’ is so far just as disappoin­ In May 2018 the Japanese and Chinese ting as some ‘BRI MoUs’ and EU attempts governments signed an MoU on business to further on-the-ground cooperation (or at cooperation in third countries. This MoU least coordination) with the Chinese side. does not mention the BRI, but does include This should serve as a reality check for an agreement to set up a public–private other developed partners – including Italy committee to promote cooperation in third and the Netherlands – that agree to greater countries. As such, it may be regarded cooperation on infrastructure projects with as an attempt to cooperate in countries Chinese companies. where China might also push its BRI. The symbolic value to the Chinese government of the language and concepts included Cooperate, coordinate and in the MoUs is illustrated by the informal forge synergies account of the negotiations of this MoU by one of the Japanese officials involved: when Japanese negotiators proposed to Summing up, what stands out is that Japan’s Chinese representatives that its preferred conditional engagement with China has ‘Free and Open Indo-Pacific’ (FOIP) vision resulted in an MoU on business cooperation be mentioned in the MoU – next to China’s in third countries that mentions neither BRI – the Chinese side reportedly preferred the BRI, nor Japan’s preferred ‘Free and to leave out reference to the BRI and to FOIP Open Indo-Pacific’. European governments entirely.4 The rational decision of both sides that do want to cooperate with China on not to mention the FOIP or the BRI in the infrastructural connectivity should do MoU can be interpreted as a sign of a shared the same, by making the signing of an understanding by both governments that MoU conditional on reference not just to deepening economic ties would contribute China’s BRI but also to Europe’s Euro–Asia to a more stable relationship between the Connectivity Strategy, which emphasises two countries. sustainable, comprehensive and rules-based connectivity. Or they should have China Both sides moved swiftly with their attempts agree not to mention either, similar to the to stimulate business cooperation in third China-Netherlands MoU. countries. A seminar was held in Bangkok at the end of May 2018 and an infrastructure Japan’s example indicates that carefully cooperation forum was held in October 2018 negotiating an MoU with China will reduce on the sidelines of the China–Japan Summit the symbolic value to China, while still in . An MoU was then signed for 52 allowing for cooperation. It also shows specific projects. Despite the government that significant commitment to follow up is push, practical cooperation proved difficult. required to test the real potential for business Cooperation on the Thai railroad collapsed in cooperation. European countries seem to December 2018 when ‘risk concerns’ caused

5 Toru Takahashi, ‘Sino-Japanese cooperation thrown 4 Author’s informal communication with a Japanese off track over Thai rail project’, Nikkei Asian Review, diplomat, 29 November 2018. 16 December 2018, available online.

4 Clingendael Policy Brief

have done little in this regard. Surely, this should not, however, be a reason to steer is because of the limited role that Japanese away from such cooperation. Rather, it and European governments can actually should serve as impetus for continued play to facilitate cooperation. Unlike in attempts at engagement as well as China, private companies’ activities are, after reinforced cooperation between like-minded all, independent of government priorities, countries. Public reports about successes and with market-based cooperation as a and failures in this regard may be one of guiding principle, private companies will take the more promising avenues to steer the opportunities as they arise, irrespective of a practices of Chinese banks and businesses government’s impetus. towards more transparency and a more sustainable approach. Now is the time for The limited success of the MoU in terms of exchange of best practices, and cooperation furthering cooperation between Japanese and coordination in this regard, between and Chinese companies in third countries Japan and the EU and its member states.

About the Clingendael Institute Clingendael – the Netherlands Institute of International Relations – is a leading think tank and academy on international affairs. Through our analyses, training and public debate we aim to inspire and equip governments, businesses, and civil society in order to contribute to a secure, sustainable and just world.

www.clingendael.org  @clingendaelorg [email protected]  The Clingendael Institute +31 70 324 53 84  The Clingendael Institute

About the authors

Maaike Okano-Heijmans is a Senior Research Fellow at the Netherlands Institute of International Relations ‘Clingendael’ in The Hague. She is a Scientific Coordinator of the Asia–Pacific Research and Advice Network (#APRAN) for the European Commission and the European External Action Service.

Tomoki Kamo is a Professor of Chinese Politics and Foreign Policy at the Faculty of Policy Management at Keio University, and Vice-Chair of the Center for Contemporary Chinese Studies at Keio University, Japan.

5