The European Union and China Foreign Direct Investment Cooperation in the Context of the Belt and Road Initiative

The article analyses the foreign direct investment cooperation between the European Union and the People’s Republic of China under the Belt and Road Initiative. The initiative is proposed by China and is aimed at developing cross-regional transport and logistics infrastructure connecting China with South-East, South and Central Asia, the Middle East, East Africa and Europe. The author examines the history of the initiative and its assessments by international organizations (e.g. the World Bank and the ESCAP UN) and investigates the structure and statistics of the EU-China investment relations, basing on the examples of the most important China’s investment partners (including France, Italy, Germany and the Vishegrad Group countries). The discrepancy between the conditions for the EU and the Chinese investors is highlighted. The author defines and characterizes the major models of the Belt and Road projects’ development, which are used by China in cooperation with the EU Member States. The EU investors in China face restrictions imposed by the national regulation of foreign investments. In particular, the external investors do not have access to the sectors crucially important for national interest and security (e.g. high-tech sectors and mass media). At the same time, Chinese investors’ access to the EU financial markets is not limited, allowing them to become important shareholders in the EU companies and to transfer technologies. It raises concerns within national governments and the European Union itself. The national governments are establishing and adopting screening mechanisms for foreign direct investments and additional regulations to control important sectors and enterprises. At the same time, the EU Member States are developing a common view on the prospects and mechanisms of cooperation with China under the Belt and Road initiative. The EU countries have not yet reached a consensus upon the Belt and Road initiative and the prospects of the EU participation in it, so the author focuses on the strategies of the examined countries. Germany is calling for a common position for all the EU member states and advocates for using the EU-based mechanisms and platforms for cooperation with China. Such demands are also connected with the promotion of a common EU investment screening mechanism in order to protect the Member States’ interests and security. Italy is deepening its cooperation with China through bilateral mechanisms, mainly based on a memorandum of understanding with China on the Belt and Road initiative. France, on the one hand, shares the common interest with Germany regarding the need for the common EU policy towards the Chinese initiative, but on the other hand, the country is deploying new projects with China. The Visegrad Group states are forging their ties with China through bilateral and multilateral cooperation mechanisms and they are interested in the growth of Chinese investment inflows. This undermines the unanimity of policy towards China and the Belt and Road.