The European Commission and China have concluded technical work allowing Beijing to start pouring up to €10 billion under the so-called Juncker Plan, EurActiv.com has learned.
Brussels and Beijing set up a working group last September in order to find the best solution to channel the big sum of money that China was ready to offer.
According to EU officials, the figure would range between €5 and €10 billion.
China was the first non-EU country to announce its contribution to the plan, although it was unclear what was the best technical option to facilitate its involvement.
China could become the largest non-EU contributor to the so-called “Juncker Plan”, the European Commission President’s flagship investment initiative to revive growth in Europe.
After months of talks between the two sides, the EU and Chinese authorities have agreed that Beijing will contribute to the European Fund for Strategic Investments (EFSI) via its Silk Road Fund, a public fund.
This means China will have to fulfill the same rules applicable to private investors, a Commission official explained. In addition, China will have to meet all EU rules on public procurement, labour law or environment regulations when investing under the scheme.
“There will be no special treatment for Chinese investment,” the official insisted.
Project selection set to start
It is now up to the Chinese government to start selecting projects among those already filtered by the EFSI. The EFSI is the EU’s guarantee scheme aimed at mobilising at least €315 billion in private investment until 2018. So far, the instrument has attracted investments worth €82 billion, officials say.
If China finally decided to contribute with €10 billion, it would be the largest contributor to the Juncker Plan since it was launched last autumn. To date, the biggest national contribution has come from the United Kingdom, with €8.5 billion.
Chinese Foreign Minister Wang Yi called to boost European trade links on Sunday (8 March), as the European Commission mulls Beijing’s market economy status within the World Trade Organisation (WTO).
The European Commission official ruled out that the slowdown of the Chinese economy could affect China’s appetite to invest in Europe, as the country still needs to invest in attractive projects to maximise its returns.
Although China was the first non-EU country in announcing its interest, other foreign investors have shown interest in the EFSI scheme since talks began with Beijing. According to the officials involved, investors from the US, Canada and the Middle East are already taking part in the Juncker Plan, although they did not give details on the specific figures or projects.
“Better than expected”
The executive is satisfied with the results seen since the investment plan started in Europe seven months ago. The Commission believes that the participation of small and medium-sized enterprises has been particularly successful.
After a strenuous negotiating process, on Wednesday (24 June) MEPs validated the European Fund for Strategic Investments, taking the EU one step closer to the launch of the Juncker Investment Plan. EurActiv France reports.
Around €3.4 billion have been allocated to SMEs in Europe through 150 financial intermediaries (such as banks or hedge funds), benefiting some 136,000 small businesses in 25 member states, officials said.
“This is better than expected, because we have achieved in one year what we expected to see until 2018,” the official said.
However, the European Commission would like to bolster its communication campaign to attract more projects, in order to break the “false perception” of complexity linked to the EFSI.
The promotion of some ‘success stories’, like an energy efficiency plan in France, or a plant to recycle titanium, could have some “contagion effect” and help to attract more innovative projects, the executive believes.
Given the steady progress made to date, officials are considering extending the investment plan beyond 2018, as was initially contemplated when the plan was launched.
Member states including Italy, France and the UK regard this option favourably, the Commission official said.
To date, nine member states have announced that they will co-finance projects by using the EFSI, a € 21 billion cushion supported by the EU budget to absorb potential loss in the projects. In July, the United Kingdom became the last country to join after Germany, Spain, France, Italy, Luxembourg, Poland, Slovakia and Bulgaria.
China’s investment in the bloc has sparked controversy in the past. In Greece, COSCO was blamed for paying a fraction of European salaries, and for not respecting European rights, according to the longshoreman’s union. Elsewhere, Chinese labourers have been brought in to work on massive infrastructure projects, putting into question whether its involvement would create additional jobs for Europeans, as the investment plan aims to do.
The UK obtained financial support from China to construct a nuclear plant in Hinkley. In return for a £2 billion loan guarantee, the United Kingdom would allow Chinese companies to build an additional nuclear plant in Bradwell, Essex.
The GMB union, which represents nuclear workers, said linking that deal to a reactor at Bradwell would be a “betrayal” of British workers. Brian Strutton, GMB National Secretary for Energy, said that “Chinese nuclear technology is unproven, and no UK government should even consider allowing it to be used in a new nuclear power station 60 miles from London,” the Guardian reported last September.