11 December 2018
Chinese Premier Li Keqiang will attend the China-EU summit in Brussels on June 29. Photo: AFP
Chinese Premier Li Keqiang will attend the China-EU summit in Brussels on June 29. Photo: AFP

China plans huge investment in EU infrastructure fund

China will pledge a multibillion-dollar investment in Europe’s new infrastructure fund at a summit in Brussels later this month, according to a draft communique seen by Reuters.

The pledge is its latest bid to win greater influence through “chequebook diplomacy’, the news agency said.

It follows a decision by major EU governments to join the Chinese-led Asian Infrastructure Investment Bank (AIIB) in defiance of Washington.

It is expected to come with a request for return investment in China’s westward infrastructure drive — the “One Belt, One Road” initiative — constructing major energy and communications links across Central, West and South Asia to as far as Greece.

“China announced that it would make (X amount) available for co-financing strategic investment of common interest across the EU,” the draft final statement says, adding that agreements will be finalized at another meeting in September.

An EU diplomat said the Chinese contribution was likely to be “in the billions”.

EU and Chinese officials have told Reuters that Chinese banks are looking mainly at telecoms and technology projects.

Chinese Premier Li Keqiang, who will attend the EU-China summit in Brussels on June 29, will agree with EU leaders that the 315 billion euro (US$354.94 billion) fund will “create opportunities for China to invest in the EU, in particular in infrastructure and innovation sectors”.

If sealed, the deal will be a success for European Commission President Jean-Claude Juncker, who faced scepticism last year when he proposed the European Fund for Strategic Investment (EFSI), because EU governments are putting in little seed money.

France, Germany, Italy and Poland have each announced they will contribute 8 billion euros, while Spain and Luxembourg have pledged smaller contributions.

The bloc is relying mainly on private investors and development banks to fund projects selected from an initial list of almost 2,000 submitted by the 28 member states, from airports to flood defenses, that are together worth 1.3 trillion euros.

A big Chinese investment might raise questions about governance of the fund, which is so far strictly a European institution.

An EU diplomat said it was not known whether China would seek representation commensurate with its stake.

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