China’s Belt and Road Initiative: Can Europe Expect Trade Gains?

Published on: 2017-06-02

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There are three possible scenarios for Europe according to Alicia, Chief Economist for Asia Pacific at NATIXIS and HKUST IEMS Faculty Associate, writing in BRINK. The outcome for Europe largely depends on whether the initiative will creating free trade agreements or focus solely on improving infrastructure (mainly transport). If China pursues free trade agreements with OBOR countries, removing the trade barriers, the European Union will suffer slightly. But if China focuses on infrastructure, leading to transport costs reductions, the EU will be the biggest winner.

Of course, if both infrastructure and FTAs are pursued, EU countries will still benefit, but Asian countries will benefit more.

Garcia-Herrero also hints at other ways in which One Belt One Road project will influence Europe, such as financing the massive undertaking. What is for sure, according to Garcia-Herrero, is that “more research is needed.”

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