Europe has announced a £250 billion investment in infrastructure around the world to tackle China’s rising influence globally through its Belt and Road strategy.

Ursula von der Leyen, President of the EU Commission said at a press conference that countries need different and better offers to China.

The bloc wants to invest in next-generation infrastructure including fibre optic cables, 5G networks and green energy plants to strengthen ties with poorer countries.

Brussels claims that the “Global Gateway” can provide transparent contracts and strict construction standards, as well as eco-friendly projects.  

This plan is eight years old after China began expanding its global influence at breakneck speed. It built bridges, motorways, and telecom networks across Africa, Latin America, and Asia.

Beijing’s policy of making developing countries dependent on loans to finance projects that are not up to international engineering standards is criticised by many.

Perhaps even more perilous are the “data traps” Richard Moore, the head of MI6, has warned countries about. These include the ones that could lead to them falling into when the Chinese Communist Party holds the keys to 5G networks. 

EU Commission President Ursula von der Leyen rings the bell at the beginning of the College of Commissioners in Brussels, Belgium on Wednesday

Chinese President Xi Jinping speaks in Beijing on Monday

EU Commission President Ursula von der Leyen rings the bell at the beginning of the College of Commissioners in Brussels, Belgium on Wednesday (left) and Chinese President Xi Jinping speaks in Beijing on Monday (right)

MONTENEGRO: Part of a new highway meant to connect the city of Bar on Montenegro's Adriatic coast to landlocked neighbour Serbia, (Bar-Boljare highway) on May 11, 2021, near Matesevo, which is being constructed by China Road and Bridge Corporation (CRBC), the large state-owned Chinese company

MONTENEGRO – Part of a new highway that will connect Montenegro’s Adriatic Coast city to its landlocked neighbor Serbia (Bar-Boljare Highway) was opened on May 11, 2021 near Matesevo by China Road and Bridge Corporation, a large Chinese state-owned company.

PAKISTAN: A massive construction site near Gwadar Port, operated by China Overseas Ports Holding Co., in Gwadar, Balochistan, Pakistan

PAKISTAN. A large construction site is located close to Gwadar Port. This project was operated by China Overseas Ports Holding Co. (Gwadar), Balochistan.

Moore told Radio 4 this week that Beijing is ‘trying to use influence through its economic policies to try and sometimes, I think, get people on the hook.’

Moore stated that if you give another country access to critical information about your society over time, that will reduce your sovereignty. 

According to the EU Commission, its Global Gateway Strategy will begin investing by 2027. 

A statement today touted the bloc’s financial repute, democratic values and green credentials, as opposed to the infrastructure projects offered by China. 

According to the Commission, “The EU will provide its financing at fair and favourable conditions in order limit the risk for debt distress,”

“It will be focused on physical infrastructure such as fibre optic cables and clean transport corridors – in order to improve digital, energy, and transport networks. 

The EU must move quickly to complete its project in Beijing if it hopes to catch up with China. 

The first issue could be the £250 billion euros it has pledged which is dwarfed by China’s own Belt and Road spending, which could rise to £975 billion by 2027, according to Morgan Stanley.

Beijing has another advantage: it finances the initiative via its state-owned banks. The EU, however, will need to cobble together funds from private financial institutions.

It will require convincing banks that investing in Europe’s political benefits is worthwhile.

Also, the EU wants to agree on fair play as well as transparency. These are requirements that drove many countries with poorer economies to accept no strings attached financing from China.  

China’s top three state investment banks have lent $140 million to Latin American countries since 2005 to help pay for everything.

China’s President Xi has announced that a 60 billion dollar pot of Chinese currency was created in 2018 specifically for African development projects.    

China's state banks have loaned some $140billion to Latin American and Caribbean countries since 2005, which is thought to be just a fraction of the money that has flowed to the region when private deals are taken into account. Beijing is also involved in major infrastructure and energy projects in most countries, including transport networks and power stations

Since 2005, China’s State Banks have loaned $140billion to Latin American countries and the Caribbean. This is only a small fraction of what has been lent to the region through private transactions. Beijing also participates in many infrastructure and energy projects, such as power stations and transport networks.

China-US share of trade 2000

China-US share of trade 2019

Left: In 2000, Latin America’s largest countries had more trade relations with America than with China. However, by 2019, over half of these countries had lost their trade with the US. This includes three of Latin America’s largest economies: Brazil, Argentina, and Colombia.

China has given billions of dollars in loans to African countries. The shaded red shows which countries have received cash. Darker colours indicate more debt. Beijing is also planning on building a new military base in Djibouti, as well as more sites (blue Pentagons), in Angola and Kenya. The possibility of an additional naval base along the West Coast (shadedblue) has raised alarm among the US.

China has pumped at least $7billion in investment into the Caribbean since 2005, records show, though the true figure - when taking into account soft loan deals and private investment - is thought to run well into the tens of billions. Showpiece projects have included a cricket stadium in Grenada, a casino and resort in the Bahamas, and acquiring Jamaica's largest port

According to records, China has invested at least $7 billion in the Caribbean over the past five years. However, the real figure, when you consider soft loans and private investments, is well within the tens or hundreds of billions. Highlight projects include the construction of a Grenada Cricket Stadium, a Bahamas casino, resort, and the purchase of Jamaica’s largest port.

China has also invested $7 billion in six Caribbean countries since 2005, including roads, ports, and the resort and casino Baha Mar, which is a five-star hotel and resort. However, the real figure could be in the hundreds of billions.

This gives China leverage. This is how it gets its own way at international events, whether it’s winning UN votes or isolating enemies. Taiwan is the most prominent example of this, since Beijing requires other countries to end diplomatic relations with Taiwan in order to receive money. 

After the US began pushing back, Europe has begun to question the Belt and Road.

Joe Biden deployed diplomatic teams in South America to help him take his Build back Better initiative, which was originally his plan to rebuild America after Covid, to the global level under the name Build Back Better World (or BW3).

Listening tours were developed to find projects that America might be interested in, and offer to China better quality products with a track record of delivery.

For example, China helped Ecuador build two hydroelectric dams during the last decade – but the Coca Codo Sinclair Dam has since run into major problems, including causing oil spills and suffering cracks. 

The answer is “Very few.” [China’s]Biden Administration officials stated at that time, “Projects make economic sense but they frequently have very poor labor standards and environmental standards.” 

BW3 will host a conference in the early part of next year. There will be more information about project funding and details on how to apply. But, so far no guarantees have been made regarding how much money will be spent. 

Latin America’s 5G network will be a key battleground. China has been lobbying for Huawei technology to be integrated into its network, and America wants countries to ban them. They argue that it can be used by Beijing to spy.

For years, Brazil, Chile, and Ecuador have been delaying important decisions about who will build their networks. They tried and failed to find a middle ground between China and the US, but it has not worked.

China's current military base in Djibouti (pictured) houses some 2,000 troops along with armoured vehicles and gunboats, with a pier constructed to allow aircraft carriers to dock (top left) along with helipads and a runway (centre)

China’s Djibouti current military base houses approximately 2,000 troops, along with armoured vehicle and gunboats. There is also a pier that allows aircraft carriers (top left), helipads and runways. 

Chinese troops and armoured vehicles parade at the base in Djibouti, located at a strategic bottleneck leading to the Suez Canal, in 2017 as the base was first opened

Parade of Chinese soldiers and armoured cars at Djibouti base, which is located at a strategic bottleneck that leads to the Suez Canal in 2017, when the base opened for the first time

China also helped Ecuador build two large dams, including the Coca Codo Sinclair project (pictured) - which quickly ran into trouble. Washington hopes that China's patchy record will allow it to recover some lost ground

China helped Ecuador also build large dams. Washington believes that China’s poor record could allow it to regain some ground.

China is in talks with Argentina to build a new nuclear reactor at its Atucha complex (pictured) and is building two more hydroelectric dams in Patagonia

China is in talks with Argentina to build a new nuclear reactor at its Atucha complex (pictured) and is building two more hydroelectric dams in Patagonia

The most prominent example of this is Jair Bolsonaro is Brazil’s president and an important ally of Donald Trump. He agreed to participate in a US initiative last December that would effectively ban Huawei from the 5G network.

He was forced to rethink his position a month later, partly because Beijing threatened to delay Covid vaccines that would help control the spiralling epidemic.

No matter what the future may bring, America and Europe are for now the best. It is playing catch up and it’s not certain that it can make up any ground. 

The development and agreement of infrastructure projects is often slow and may take several years or even decades. 

China’s influence continues to grow every day. After a meeting with Ivonne Baki (Ecuador’s Ambassador to the USA), Axios reports that:[America]Is Latin America losing to China without fighting?

Nicolás Santo, author of the China Notes newsletter on China-Latin America, added: ‘The way [China]It has discovered that trade agreements are the best way to achieve this, though its interests in the region extend far beyond that.

“I’m shocked at how little the U.S. has given to this subject over the past 10 years and still not paying attention.”