China’s Belt and Road Initiative, which aims to improve trade connectivity by upgrading transport infrastructure across Europe and Asia, could harm Europe if the focus swings too far toward free trade agreements (FTAs) rather than infrastructure, according to a working paper from Bruegel. The thinktank modelled that all the top 10 winners from reduced transportation costs would be in Europe. If the Belt and Road Initiative focused on FTAs instead of infrastructure, the EU would be isolated from a sizable free trade area next to its borders. “China is not going to win any FTA with Europe, but it will certainly gain some advantages through its investment in Europe,” said Bruegel researcher Thomas Schmitt-Matzen.
China’s Belt and Road Initiative, which aims to improve trade connectivity by upgrading transport infrastructure across Europe and Asia, could harm Europe if the focus swings too far toward free trade agreements (FTAs) rather than infrastructure, according to a working paper from Bruegel. The thinktank modelled that all the top 10 winners from reduced transportation costs would be in Europe. “China is not going to win any FTA with Europe, but it will certainly gain some advantages through its investment in Europe,” said Bruegel researcher Thomas Schmitt-Matzen.