The Belt and Road from the Other End: A European Perspective


HKUST IEMS Academic Seminar
Alicia Garcia-Herrero
7 Apr 2016 (Thursday)
4:00 - 5:00 pm
IAS4042, 4/F, Lo Ka Chung Building, Lee Shau Kee Campus, HKUST

Key insights

Alicia Garcia Herrero, Chief Economist for the Asia Pacific at NATIXIS, Adjunct Professor in HKUST’s Department of Economics, and new HKUST IEMS Faculty Associate, presented a European perspective on Chinese president Xi Jinping’s grand plan to revive the ancient overland Silk Road Economic Belt and maritime Silk Road (or Belt and Road) connecting Asia to Europe. The goal of the initiative is primarily economic, the hope being that many countries along these routes can benefit from new infrastructure and increased trade with China.

Dr. Herrero compared the new Silk Road with the United State’s post-World War II Marshall Plan, under which the United States donated billions of dollars in foreign aid to war-devastated countries in Europe. The Plan has been credited with making Europe the economic powerhouse that it is today.

However, some are more critical, arguing that it was merely an attempt by the United States to exercise political and financial control over Europe, and contain the Soviet Union. Only two years after the Marshall Plan began, its focus shifted from economic recovery to political and military cooperation. There are concerns that a similar shift from economic to military focus could occur with China’s new Belt and Road initiative.

Just as the Marshall plan led to an international monetary system based entirely on the US dollar, the new Silk Road also may be the means by which the RMB rises as an international currency. However, unlike the post-World War II era when many Western European countries were in dire economic straights and accepted whatever terms the US offered, today modern European and Asian countries have stronger economies and greater bargaining power. Thus, the Belt and Road initiative will only succeed if it creates “win-win” situations.

Currently, Europe has not given much thought to the Belt and Road project. Interestingly, an analysis of the trade impacts of the Belt and Road project finds that trade of European countries will benefit the most from the project, while some Asian countries may actually see reduced or little change in trade. For this reason, Europe should pay more attention to how it can maximize benefits from the Belt and Road initiative. 


Xi Jinping’s dream, the revival of the old Silk Road, seems to be moving ahead. With Europe standing at the end of this road and given the sheer size of the Belt and Road project (also known as the "One Belt One Road" (OBOR) initiative), one would expect it to be widely discussed in Europe. Instead, European leaders and businessmen do not seem to too busy with their crisis and post-crisis management to grasp the importance of this project for Europe. This presentation aims at characterizing the nature of the Belt and Road project and its key implications for Europe not only in terms of trade but also of geostrategic importance.

About the Speaker

Alicia Garcia Herrero is Chief Economist for Asia Pacific at NATIXIS based in Hong Kong. In previous years Alicia held the following positions: Chief Economist for Emerging Markets at Banco Bilbao Vizcaya Argentaria (BBVA), Member of the Asian Research Program at the Bank of International Settlements (BIS), Head of the International Economy Division of the Bank of Spain, Member of the Counsel to the Executive Board of the European Central Bank (ECB), Head of Emerging Economies at the Research Department of Banco Santander and Economist at the International Monetary Fund (IMF). Alicia has always combined her career in the private and public sectors with a commitment to applied research and teaching. Alicia serves as a non-resident Senior Fellow in several think tanks, in particular BRUEGEL in Brussels, Emerging Market Institute at Johnson Graduate School of Management (Cornell) and at Real Instituto El Cano in Madrid. She is also adjunct professor at HKUST and visiting faculty at China-Europe International Business School (CEIBS) in Shanghai. Alicia is also a member of the Council of Advisor of the Hong Kong Institute for Monetary Research (HKIMR). Alicia holds a PhD in Economics from George Washington University and has published extensively in refereed journals and books. Alicia is also very active with international media (Bloomberg, CNBC, Reuters, Financial Times, and the Wall Street Journal, among others).

Presentation slides

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