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Global China Inc. Tracker.
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MERICS Global China Inc. Tracker

No. 1, March 2022

Focus Topic: The War in Ukraine and the Future of the BRI in Europe

The symbol of the Belt and Road Initiative (BRI) in Eurasia, the railway connecting China and Europe, has been disrupted by overspill from the war in Ukraine. Projects planned for Ukraine now have little future, and even projects between China and Russia may be in jeopardy due of sanctions. The question now is whether the BRI’s future projects in the rest of Europe will also be disrupted. Will the shocks be felt in other parts of the BRI world? These are some of the questions explored in this edition of Global China Inc. Tracker.

China’s stance of pro-Russian neutrality will further alienate it from European countries and hamper the BRI’s rollout in Europe. Remarkably, in the UN General Assembly vote on condemning Russian aggression, usually pro-Russian Serbia voted with the rest of Europe to condemn Russia. Serbia’s vote suggests even philo-Russian countries may not rejoice at an invasion. The crisis has also united the EU, bringing Putin-friendly figures like Hungary’s Viktor Orban into the fold.

As for other EU countries, France and China recently signed an agreement worth EUR 1.7 billion to jointly build infrastructure in third countries. The list included African, Southeast Asian, and Central and Eastern European countries. China’s ambiguous position on the Ukrainian war may undermine the agreement. Even if China does not materially help Russia, China’s support for an anti-NATO narrative and a broad anti-Western stance is likely to exacerbate the security discourse around BRI projects. Amid heightened geopolitical and security concerns, future collaborations with China – such as within the EU’s Global Gateway projects in third countries– will probably face greater skepticism and more obstacles.

However, the strongest negative impact will be on BRI projects in Central and Eastern Europe (CEE). China may see nations neighboring Ukraine or Russia as suspectable to spillover instability, making investments too risky at present. In many CEE countries, memories of Soviet times make China’s neutrality towards Russia’s invasion of Ukraine anything but neutral. CEE governments may be less likely to conclude agreements with a China that is seen as an apologist for Russian actions. Chinese infrastructure investments in CEE countries were low to begin with, and the relationship between some CEE countries and China was already under strain before Russia invaded Ukraine. Will the invasion be the death knell for the region’s China-led 16+1 group? Much will depend on the length of the conflict, and how far developments in the war fuel feelings of insecurity in CEE countries. And most importantly on the strength or otherwise of China’s future support for Russia.

Will what applies within Europe also apply in the rest of the world? Apparently, not. Last week, while Europe prepared for a series of summits with US President Joe Biden to discuss future coordinated responses to the Russian invasion of Ukraine, China announced it will host the 14th BRICS (Brazil, Russia, India, China, South Africa) Summit later this year. The theme of the summit will be “Foster High-quality BRICS Partnership, Usher in a New Era for Global Development”, a theme very much in line with the new “high-quality” BRI. On that same day, the BRICS announced the opening of their own vaccines R&D centers. The centers will initially operate online connecting facilities in the five countries and only in a second phase, move to a physical center, the location of which is still to be decided. Even though the label BRI does not appear anywhere, the connection between the above project and the BRICS summit with the BRI is evident, as is China’s determination to keep the initiative going regardless of what is happening in Europe.