China watchEU Agrees on Global Infrastructure Plan to Rival China’s Belt and Road Initiative

By Jamie Dettmer

Published 13 July 2021

On Monday the EU announced an ambitious global infrastructure plan which aims to counter China’s Belt and Road Initiative. Western governments fear that China’s project encourages countries to take on large Chinese loans which can turn into “debt traps,” allowing China to leverage these debts for political purposes. Monday’s initiative continues a recent phase of greater assertiveness by the EU towards China.

European Union foreign ministers agreed Monday on an ambitious global infrastructure plan linking Europe to the world. 

The infrastructure scheme is designed to rival Chinese President Xi Jinping’s Belt and Road Initiative, which Western governments fear encourages countries to take on large Chinese loans that can then be leveraged by Beijing for political purposes.   

“We see China using economic and financial means to increase its political influence everywhere in the world. It’s useless moaning about this, we must offer alternatives,” German Foreign Minister Heiko Maas told Reuters as the foreign ministers’ summit concluded in Brussels. 

Brussels has already inked partnership deals with India and Japan to coordinate transport, energy and digital projects connecting Europe and Asia. Tokyo and New Delhi have also voiced worries about Chinese infrastructure loans making poorer countries beholden to Beijing and have warned about Beijing using commerce as a tool for statecraft and a means to expand political clout. 

Montenegro, a member of NATO and a candidate to join the EU, is cited by Western diplomats as the latest casualty of what they call China’s “debt-trap diplomacy.” The Balkan country borrowed nearly $1 billion from China in 2014 to fund a Chinese-built 41-kilometer stretch of highway outside the capital, Podgorica. The loan has driven Montenegro deep into debt and is threatening to wreck its economy. 

The EU infrastructure plan mirrors a similar pledge the Group of Seven richest democracies made last month to back infrastructure partnerships, using Western development bank loans and first-loss guarantees to private companies, to rival the Belt and Road Initiative, often nicknamed the New Silk Road.   

The West’s New Assertiveness
Monday’s initiative continues a recent phase of greater assertiveness by the EU towards China. It follows diplomatic efforts by US President Joe Biden to cajole European allies to take more aggressive action against China, including on forced labor practices, breaches of international trade rules as well as over what Washington sees as Beijing’s problematic global infrastructure financing schemes. 

And Mr. Biden has urged America’s European allies to shape a much more united defense of democracy and human rights. China’s crackdown on Hong Kong and on its Uyghur minority in the province of Xinjiang led in May to EU lawmakers stopping ratification of the Comprehensive Agreement on Investment, a trade deal between the EU and China which was signed just in December.

The EU has imposed sanctions on Chinese officials for rights abuses, prompting retaliation by Beijing, which in turn penalized several