Juncker plan: China ready to invest “billions”

In an exclusive interview, Katainen welcomes Beijing’s interest in the Commission’s plan

By  Sébastien Falletti  •  06 May 2015

Katainen

Commissioner Jyrki Katainen tours around the EU to find support and funds for the EFSI, ©EC

An unprecedented matchmaking event will take place at the EU Committee of the Regions (CoR) on 4 June, in the heart of Brussels. Regions from all over the EU will do their best to catch the eyes of unexpected suitors: Chinese banks. Some of the largest Chinese public banks will look for opportunities to invest in the so-called Juncker plan for infrastructure on that occasion, Europolitics has learnt. European regions are invited to present infrastructure projects with the aim of convincing Chinese bankers to fund them, under the umbrella of the Juncker plan, said the organiser, ChinaEU.

This brand new Brussels-based association is pushing for greater EU-China financial and technological cooperation. It sees the Commission president’s ambitious strategy as an ideal springboard. “This is a win-win situation. Europe has a plan and needs investment. Many regions could not implement certain projects due to a lack of funding. China’s financial capacity is huge,” said Luigi Gambardella, chairman of ChinaEU. Beijing has already notified the Commission of his interest in investing in the plan, the Commissioner for growth and jobs, Jyrki Katainen, told Europolitics. Although no figures are on the table yet, Chinese banks are ready to invest “billions” if the right conditions are met, according to Gambardella.

“The EU is open to investment, the origin of an investor is irrelevant,” said Katainen

From China’s perspective, Juncker’s initiative is timely as it fits its own economic and geopolitical agenda. Under President Xi Jinping, the world’s second largest economy is engaged in a new ambitious global investment drive aimed at bringing home know-how and technology as well as maximising its own diplomatic influence. The Chinese leader has unveiled his new ‘Silk Road’ strategy, which aims at “connecting” the Eurasian continent better through new transport and telecommunication infrastructures. “This is their top strategic priority. They raise this issue systematically, at each meeting,” said an EU diplomatic source. The EU’s early response was tepid, but the Juncker plan offers a chance to turn this cooperation into reality.

Silk Road

In the eyes of cautious Chinese investors, the Juncker plan offers a reassuring framework, thanks to the involvement of the EIB. “Each project needs to be approved by the EIB. Yet, Chinese banks will examine very closely each project on its own merit,” said Gambardella. The plan offers an almost risk-free opportunity in one of the world’s most advanced economies. This is gold, at a time when Beijing looks to upgrade its own economy. “We need to upgrade our economy. In today’s world, the fastest way to gain competitiveness is to acquire it abroad,” commented Jiang Shixue from the Academy of Social Sciences in Beijing.

China’s new ‘go out’ strategy aims at turning the country into an influential global investor, while it was essentially a recipient of international capital over the last three decades.

Three questions to Commissioner Jyrki Katainen
Are China or other non-EU countries allowed to take part in the Juncker plan?
The aim of the ‘Investment plan for Europe’ is to strengthen the Union’s competitiveness and to stimulate investment for the purpose of job creation. It is based on a smart use of public money to help unlock available, but untapped, private liquidity. The EU has suffered a significant drop in investments since 2007-2009. It was important for the Commission to put forward a plan that is open to third parties, including entities outside the EU. This is spelt out in the proposed regulation for a European Fund for Strategic Investments (EFSI), which provides the legal framework for the new investment vehicle. Negotiations on the regulation are ongoing between the EU co-legislators (the member states and the European Parliament), with a view to concluding them in June.
Have the Chinese authorities expressed their interest in taking part in the plan? If yes, are there any figures on the table?
The Commission has been contacted by stakeholders from outside Europe, including from China, but no concrete figures or proposals have been presented from China or elsewhere. The Commission is looking forward to continuing the dialogue with all interested parties.
Does the Commission limit any such involvement? Any concerns regarding technology transfer? Security?
The EU is open to investment. Unlike the other fundamental freedoms enshrined in the EU treaty, which are limited to the EU single market, the principle of free movement of capital also applies to investments from third countries. As regards the investment plan, the EFSI will be active in a range of sectors with a strategic European interest – from broadband and transport infrastructure to education, research and innovation. The main purpose is to create jobs and stimulate growth. The origin of an investor or project promoter is irrelevant in this context.
Source: Europolitics