Europe’s Global Gateway Plans To Counter China, But Questions Remain
from Asia Unbound

Europe’s Global Gateway Plans To Counter China, But Questions Remain

Europe is responding to China's Belt and Road Initiative, but it is unclear whether its alternative can succeed.
View of the Piraeus Container Terminal, near Athens, Greece, on June 6, 2016.
View of the Piraeus Container Terminal, near Athens, Greece, on June 6, 2016. Alkis Konstantinidis/Reuters

Jennifer Hillman and David Sacks are codirectors of the CFR-sponsored Independent Task Force report on a U.S. Response to China’s Belt and Road Initiative, which is co-chaired by Jacob J. Lew and Gary Roughead.

During her September 15 State of the Union address, European Commission President Ursula von der Leyen announced a European Union (EU) response to China’s Belt and Road Initiative (BRI), Beijing’s project of financing and building everything from roads to power plants and digital infrastructure around the world.

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The EU’s initiative, dubbed “Global Gateway,” is an overdue and welcome response to BRI, but unless it is coordinated with the G7’s “Build Back Better World” plan and receives dedicated resources, it is unlikely to offer a meaningful alternative.

Von der Leyen made explicit that Global Gateway is a response to BRI, which has in recent years been making inroads to Europe. She argued the EU had to invest more strategically, because “it does not make sense for Europe to build a perfect road between a Chinese-owned copper mine and a Chinese-owned harbor.” Taking a swipe at BRI, she exclaimed, “We want to create links and not dependencies!”

The EU’s unveiling of Global Gateway accompanies growing European disillusionment with China. In May, the European Parliament voted against ratifying the Comprehensive Agreement on Investment with China, citing Beijing’s sanctions on European parliamentarians and scholars and its human rights abuses. This year, France sent a nuclear attack submarine to conduct patrols of the contested South China Sea. Most recently, Lithuania withdrew from the “17+1” group with China and agreed to allow Taiwan to open an office in its capital, after which China responded by warning Lithuania of “potential consequences” and both countries recalled their ambassadors.

This growing concern with Chinese actions and recognition that the Indo-Pacific is “increasingly strategically significant for Europe” culminated in the release of the EU’s strategy for the Indo-Pacific, which occurred on the same day that Global Gateway was announced.

In introducing Global Gateway, the EU is recognizing the need to think more critically about the tradeoffs that accompany receiving Chinese infrastructure loans. For instance, while all 27 EU member states have pledged to reduce emissions by at least 55 percent by 2030, China has built and is building coal-fired power plants that do not meet EU environmental standards in EU enlargement countries Bosnia and Herzegovina and Serbia. China’s funding of coal-fired power plants in Europe could complicate EU accession for some countries and make it harder to contend with climate change.

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In addition, China is increasing its focus on the Digital Silk Road (DSR), which has worrying security implications. China is promoting Huawei fifth-generation (5G) network technology across the globe, raising concerns within the U.S. government, which has concluded that Huawei is effectively an extension of the Chinese Communist Party. Europe has not taken a unified position on Huawei, with EU members Austria, Hungary, and Ireland all leaving the door open to using Huawei 5G equipment. Global Gateway could reflect a growing recognition within the EU of the need to promote an alternative to Huawei.

Finally, the EU’s announcement emphasized “transparency and good governance,” an implicit contrast with BRI’s opaqueness. Montenegro, a candidate to join the EU, has approached the bloc for debt relief after it realized it could not repay China for the $1 billion highway funded through BRI, serving as a cautionary tale of BRI in Europe. A recent report that studied contracts between Chinese state-owned entities and government borrowers found that Chinese contracts contain confidentiality clauses, provisions that the debt will be kept out of collective restructuring, and language that could allow lenders to influence a country’s foreign policy. Our recent independent Task Force report detailed the allegations of corruption along the Belt and Road and the ways in which China uses economic leverage over countries to attempt to influence their foreign policies. The EU seems to be taking seriously the potential that China will use its economic influence to sow division within the bloc.

While a sound initiative in principle, Global Gateway raises just as many questions as it answers. So far, there is no indication that Global Gateway will have a dedicated budget or staff, making it possible that this will simply be a rebranding of existing and proposed infrastructure investments. In order to offer a meaningful alternative to BRI, Global Gateway will need to both harmonize the efforts of export credit and development agencies within the EU and also get access to additional funds for investments.

It is also unclear to what extent—if any—Global Gateway will work in tandem with the Group of Seven’s (G7) response to BRI, “Build Back Better World” (B3W), which it rolled out in June. The G7 includes EU members France, Germany, and Italy, and it seems unlikely that these three members will want to commit resources to two separate responses to BRI. France, which recalled its ambassador to the United States in the wake of the United States announcing a deal to sell submarines to Australia, could prove unwilling to commit resources to B3W and more inclined to support Global Gateway. It is ironic that less than two weeks after Estonia’s prime minister argued Europe and the United States needed a single, unified response to BRI, the EU announced yet another initiative. Unless B3W and Global Gateway coordinate their approaches, neither will meet its full potential.

The EU’s introduction of Global Gateway reflects its growing unease with China’s more assertive foreign policy and BRI’s inroads into Europe. It is unclear, however, how Global Gateway will compete with BRI, what resources it will have at its disposal, and how it will coordinate with other nascent responses to BRI. To maximize its impact, Global Gateway should focus on digital infrastructure, an area that has the potential to lock European countries into Chinese technological ecosystems and where two EU member states (Finland and Sweden) offer viable alternatives. The United States, for its part, will need to ensure that B3W and Global Gateway do not work at cross-purposes and are instead complementary.

BRI can be seen in part as a marketing success, a way for China to build a narrative that it is an ascendant economic power and a country’s prosperity is intimately tied to closer relations with Beijing. If Global Gateway and B3W falter, it could confirm the other part of the narrative China is trying to establish: the West’s best days are behind it, and the United States and Europe do not have the will to offer an alternative to China. The stakes are high.