Is the BRI a game-changer? Connectivity, the Global Value Chain and the Rise of China as a New Centre of the World Economy? J-C Defraigne UCLouvain Saint-Louis, IEE Louvain School of Management June 2019

BRI: a defensive strategy to integrate the Eurasian continent and its neighborhood Going west to escape the US pivot to Asia (Wang Jisi) and to reduce the Malacca straight’s dilemma To be able to check the capacity of advanced economies (The US, the EU and Japan) to impose trade rules through large regional (TPP, TTIP, EU Mercosur) or bilateral trade agreeements To integrate better China’s Western provinces To ensure market access to Europe by non institutionnal means: infrastructure and de facto economic integration To generate more outlets for Chinese manufacturing in order to reduce overcapacities?

Assessing the BRI potential effects Quantitative approach: how big is BRI? Data limitation A comparison with two other regional integration strategies involving infrastructure projects, exports platform,ODA and FDI: Japan “flying geese” in Southeast Asia 1985-1996 The EU enlargement toward Eastern Europe 2000-2007 Can BRI foster the technological upgrading of recipient countries and their insertions in IPNs? To what extent the BRI could modify existing economic relations between the existing centres and the peripheries in East Asia, Central Asia, the Middle East, Africa and Europe?

BRI effective spending Table 1. BRI, Marshall Plan, Flying geese wave and EU enlargement funds compared Sources: Defraigne 2019, Maddison Project 2008, OECD 2019, Eurostat 2019, James 2003, Broadberry & Rourke 2010, Berend 2009, IMF 2019, Hillman 2018 BRI 2013-2049 BRI effective spending 2014-2017 Marshall Plan 1948-1951 EU accession funds 2000-2006 Japan flying-geese 1986-1989 Financial aid and loans (in billions of current US dollars) $1000 $340 $12,4 to $13 € 80 $17,76   Duration of the programme 36 years (2013-2049) 4 first years (2013-2017) 4 years (1948-1951) 7 years (2000-2006) (1985-1989) Combined GDP of recipient countries for the duration of the programme (in billions) $ 12526 (for the year 2017) $ 41391 (combined 2014-2017) $$ 887 € 3935 $18098 Average annual share of GDP 0,22%* 0,82% 1,39%-1,47% 2% 0,1%

Exports in blue imports in red Source: OEC 2019

Export structure of important BRI recipient countries: Pakistan

Export structure of important BRI recipient countries: Malaysia

Export structure of important BRI recipient countries: Serbia

Export structure of important “flying geese” financial flows recipient countries: Thailand

Export structure of important “flying geese” financial flows recipient countries: Malaysia

Export structures of pre-accession EU financial flows recipient countries: Czech Republic

Export structures of pre-accession EU financial flows recipient countries: Hungary

Export structures of pre-accession EU financial flows recipient countries: Romania

transport costs $ per forty-foot equivalent unit shipping container Costs of rail, sea and air transport from China to Europe in 2017 (source: Schramm & Zhang 2018) Transport mode days of transit transport costs $ per forty-foot equivalent unit shipping container Rail 16 6350 Sea 32 2410 Air 4 32490

Percentage of GDP spent on R&D (source: World Bank 2019)

Table 20. High-tech exports in billions of current dollars (source: World Bank 2019)

Medium and high-tech share of total manufactured exports (source: World Bank 2019)

Royalties in millions of current dollars (source: World Bank 2019)

GDP per capita in current dollars (source: World Bank 2019)