Professor Lee Jones in this PPT shows the bilateral investments along the Chinese Belt and Road Initiative. The PPT shows through data and graphs the levels and impacts of these investments.

1. China’s Belt and
Road Initiative
and Bilateral
Investment
Dr Lee Jones
Queen Mary University of London
www.leejones.tk
l.c.jones@qmul.ac.uk

2. Content
• What is the BRI?
• How does it work?
• Where is China investing in Europe?
• Where is Europe investing in China?
• Comprehensive Agreement on Investment

3. What is the BRI?
• Not a top-down “grand strategy” with centralised decision-making
• A loose policy framework that allows many different actors to pursue
self-interested agendas under a common rubric
• Key actors = provincial governments and SOEs, lobbying for loans,
subsidies, etc: builds on previous rounds of external expansion
• 2014-18: construction $256bn vs investment US$148bn, led by energy and
transportation
• SOEs got 96% of construction contracts, 72% investment projects
• What do Chinese SOEs want?
• Profit!
• Contracts
• Technology
• Market access } Mergers & Acquisitions

4. How does the BRI “work”?
• How are projects decided?
• Chinese development financing is always recipient-led
• Beijing links applicant to prospective SOE to work out the details (other
agencies not involved in negotiations)
• If disinterested, SOEs won’t do a project, even when pushed – e.g. nuclear plants in
Romania
• SOEs often lobby would-be recipients to apply for funding in first place
• Regulators and policy banks review/ approve scheme – very weak oversight
• Projects can be standalone or packaged into bilateral MOU
• Top-level “sign off”/ steer can unlock permissions/ funding
• NB “BRI” vs “non-BRI” projects often impossible to distinguish: BRI as
bandwagon

5. Chinese contracts/ investment in Europe

6. To note…
• Not all going to Eastern Europe…
no “grand strategy”
• Concentrated in most lucrative
markets
• BRI led to surge, but peaked in
2017
0
10000
20000
30000
40000
50000
60000
70000
80000
90000
100000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Total Chinese Contracts/ Investments in Europe ($100ms)

7. To note…
• Still a pretty small share
of overall inward
investment in Europe,
despite all the panic

8. Sectoral composition
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Energy
Transport and
logistics
Agriculture
Finance
Technology
Real estate, tourism
and entertainment
Other

9. Mergers and Acquisitions (M&As)
$bn
Globally, Chinese M&As
are rising quickly…

10. M&As
… and a lot of
M&As are
targeting EU
companies…

11. M&As
… but despite all the
panic, again, they’re
still only a small
share of the total
overall in EU
Distribution in 2017

12. European investment in China
2018: $7.2bn (3x US)
+ $19.8bn via HK
= $27bn
= roughly 1/5th of
total

13. Sectoral composition

14. Comprehensive Agreement on Investment
• In negotiation since 2014
• EU increasingly alarmed about influx of Chinese investments to EU
(and surging M&As)
• Given Chinese growth, prospects for EU investors far greater than,
say, US … if China grants full market access
• But in reality EU investors increasingly gloomy about China market

15. Comprehensive Agreement on Investment
EU Objectives China-side issues
1) Equal treatment with SOEs (incl. eliminating
subsidies/ disciplining their behaviour)
SOEs are powerful interest groups and central to
China’s economic strategy
2) “Non-discriminatory treatment” e.g. no forced
joint ventures/ technology transfers
Seen as necessary to escape “middle income trap”
(Made in China 2025)
3) Regulatory clarity, predictability and objective
regulation, licensing etc
Lack of clarity is a key tool of CCP control over
business
4) IPR protections IP theft is widespread, hard to suppress, and part
of value-chain climb
5) “Adequate commitments” on environment and
labour
Standards increasing in China, but low standards
are part of its “comparative advantage”
6) Dispute-settlement system based on Investment
Court System
See 3; CCP control over courts means they may not
enforce international rulings

16. Useful sources
• European Parliament, EU-China Trade and Investment Relations in
Challenging Times, Report PE 603.492, May 2020
https://www.europarl.europa.eu/RegData/etudes/STUD/2020/60349
2/EXPO_STU(2020)603492_EN.pdf
• European Commission, Commission Staff Working Document on
Foreign Investment in the EU, Following up on the Commission
Communication “Welcoming Foreign Direct Investment while
Protecting Essential Interests”, 13 September 2017, 13 March 2019
https://trade.ec.europa.eu/doclib/docs/2019/march/tradoc_157724.
pdf