Foreword to China’s belt and Road Initiative and the Baltic Sea Region – An entrepreneurial Perspective

Trade and investment are at the core of China-Europe relationship and China’s New Silk Road initiative adds new a new dimension to the interaction between the two partners.
China’s accession to the WTO in 2001 has been a milestone in China’s reform and opening-up policy, and a step forward in the transformation of its economy. It required a lot of efforts from China on the domestic front, and it led to a rapid increase of China-Europe trade, of the flow of Foreign Direct Investment entering into China, and later to a major increase in Chinese Outward Foreign Investment.
International trade is also at the center of China’s “Belt and Road” initiative which aims at enhancing trade openness: removing investment and trade barriers, lowering non-tariff barriers, promoting mutual assistance in law enforcement, enhancing customs cooperation, and developing cross-border e-commerce.
China’s initiative, announced in 2013 has two unique characteristics:
huge investments in transport infrastructure and logistics hubs along both the Maritime Silk Road and the Eurasian landbridge connecting China to Europe through Central Asia,
new financial instruments and development banks to finance these investments such as the Asian Infrastructure Investment Bank (AIIB) created in 2014.
China’s announcement of the One Belt One Road initiative has been followed by discussions between China and countries potentially interested by the project, as well as with new investments in transport infrastructure in Asia, Africa, Central Asia, and Europe.
In Europe, China is developing its initiative mainly through bilateral cooperation agreement at the country level, with a special attention to the countries of Central and Eastern Europe. China’s first remarkable investments in Europe in the framework of the One Belt One Road initiative have been in the Greek port of Piraeus and in the railway’s connection between Greece, Serbia, and Hungary.
China’s New Silk Road initiative will contribute to a reduction of the duration and cost of transportation between China and Europe, and will stimulate the development of a modern transport infrastructure based on mega container ships, large automated container terminals, better connectivity between large European seaports and their hinterland, and rapid railways connection connecting seaports, large metropolis and final consumer markets.
Among European countries, Germany should benefit directly from the increase of China-Europe trade at the level of its logistics hubs, such as Hamburg and Duisburg, as well as for logistics companies such as DB Schenker, the transportation and logistics subsidiary of Deutsche Bahn. But more generally the development of trade should serve the interests of German firms operating in China and Chinese firms investing in Germany. It should also contribute to the development of China-Germany advanced technology cooperation.
The reduction in distance-related costs will have also a major influence on the localization of economic activities and the reorganization of the global value chain along the trade routes between China and Europe. From that point of view, China’s initiative is a new opportunity for landlocked countries along the way such as Belarus and Central Asia countries.
The EU Baltic Sea Region is connected to China by both the maritime routes and the new Eurasian land bridge, which creates new opportunities of cooperation for the Northern provinces of Poland and Germany, and for the Nordic and Baltic countries. Companies operating in the region, which have a strong experience in international trade and a management culture oriented towards innovation, are developing joint projects with Chinese firms in sectors such as renewable energy, ICT, marine engineering, and environmental technology.
China’s New Silk Road forward-looking initiative represents an opportunity for European companies and regions, and a source of progress and innovation for both partners.