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The EU is struggling to counter China’s growing influence around the world as Beijing proves more agile at providing infrastructure investment to countries in the global south, the bloc’s development chief has warned.
Jutta Urpilainen, European commissioner for international partnerships, said complex bureaucracy and environmental and social conditions attached to EU financing made it hard for the bloc’s international investment strategy to counterbalance China’s Belt and Road Initiative.
“We are living in an era of geopolitical competition,” Urpilainen told the Financial Times. “We face a battle of narrative, but more and more we face a battle of offers,” she said, referring to China’s pledges of swift financing and rapid project completion.
“It’s true that we might not be the fastest partner,” she added. “China has been very strategic. If you travel, for instance, in Africa, you can see tangible outcomes of co-operation with China . . . Be it football stadiums, railways, ports or roads.”
China’s BRI invested almost €1tn in 152 countries between 2013 and the middle of last year, according to the American Enterprise Institute think-tank. However, its annual funding dropped sharply after the number of borrowers defaulting on repayments began rising in 2020. China renegotiated or wrote off about $78.5bn of loans between 2020 and March 2023.
Urpilainen acknowledged that the EU’s partners also welcomed investment from Beijing. But she noted that Chinese companies often built projects it had also financed, and insisted the EU was a better long-term partner.
“That partnership has created huge dependency on China. Our aim — and it’s in our own interest — is to strengthen the resilience, self-reliance and independence of [EU] partners,” she said.
Brussels sought to help partner countries move up the value chain, she said. For example, EU investors wanting to develop a mine in a country would also have to commit to processing ore there.
The EU’s Global Gateway, designed to run between 2021 and 2027, seeks to mobilise up to €300bn of investments in infrastructure projects across low-income countries. It aims to establish international partnerships that avoid recipients forming “dependencies” on donors, “where we as donors are imposing and telling them what they should do”, Urpilainen said.
Poorer countries “don’t want to be the subject of aid. They want to have an equal partnership,” she added.
Global Gateway brings together EU development banks, national governments and the European Commission, as well as the private sector, for investment in infrastructure, mining and other industrial projects.
To date it has committed about €100bn to 225 projects, and Urpilainen said she was confident it would hit the €300bn target by 2027.
However, she said new EU environmental rules that made it harder to export produce such as cocoa and steel to the bloc had alienated partners. These include a deforestation law that compels exporters of six commodities, including coffee, palm oil and rubber, to prove they were not produced on land that was recently deforested.
Several governments in Asia, Africa and Latin America have complained the rules are burdensome and risk wiping out the livelihoods of tens of thousands of smallholders unable to cope with complicated certification procedures, which include geolocation of their crops.
Agriculture commissioner Janusz Wojciechowski and agriculture ministers from 20 member states have also asked for the suspension of the law, which applies in the bloc.
Although the EU has temporarily eased the law’s requirements in response to the concerns, Urpilainen said she favoured delaying implementation. “Maybe we should consider that. I think it’s important to have a dialogue and then help our partners meet the conditions,” she said.
Urpilainen said the EU had signed a memorandum with the DRC and that the idea behind the agreements was “precisely to try to address such illegal mining and other activities”.
She also brushed aside criticism that the EU was making development funding conditional on action by countries to combat migration, signing deals with autocratic regimes in Tunisia and Egypt. The two countries are transit routes for migrants seeking to cross the Mediterranean to Europe. “Is there this objective to stop migration? No,” she said.
But noting that Africa was expected to have a population of 2.5bn by 2050 compared with about 450mn in the EU, she added: “It is in our interest to improve the livelihoods and create opportunities for the citizens of Africa, especially for young people.”
