Summary of Unique · Human Landscape and Density Analysis Human Landscape is a foundational human...
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Transcript of Summary of Unique · Human Landscape and Density Analysis Human Landscape is a foundational human...
Europe is the main target of China’s Belt and Road
Initiative (BRI). Economic integration between Europe
and China has grown in recent years, especially since
the BRI was announced in 2013. As such, concerns
are mounting amongst Europe’s largest economies
about China’s poaching of European technology, the
effects of its pervasive discounted communications
infrastructure, plus its substantial and growing
economic and strategic involvement in the Balkans as
well as Central and Eastern Europe.
This Spotlight examines China’s recent trade and
investment activity in Europe. It highlights where
China is upsetting longstanding economic relations
and bolstering its strategic interests across Europe.
Summary of Unique Tools & Applications
Satellite Imagery
Monitoring change at scale can be difficult, especially in
restricted and areas of conflict. Our analysts leveraged
Maxar’s satellite imagery to capture temporal insight on
China’s investments across Europe because it offers the
highest commercially available resolution, spectral diversity,
and geolocation accuracy—delivering defensible data for
critical analysis and decision making.
Human Landscape and Density Analysis
Human Landscape is a foundational human geography dataset
that provides rich attribution and metadata at a country-wide
scale, reducing operating costs while accelerating time-to-
action with comprehensive context. For this study, Chinese
investment data was compiled by sector and location across
Europe, then analyzed to identify the clustering of point densities
and areas with significant Chinese investments and acquisitions.
EUROPE: china’s primary theater for strategic investing
Total Investments AND Construction Contracts, 2013-2018
$305billion
$182billion
$180billion
$56billion
$93billion
SouthAmerica
NORTH America
SUB-SAHARANAFRICA
EUROPE
West ASIA
EAST ASIA
AUSTRALIA
MENA
$164billion
$175billion
$100billion
(American Enterprise Institute)
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S P O T L I G H T
Strategic partnership with China
Conflicting Influences at Play:Strategic Partner vs Systemic Rival
China has several goals for their BRI efforts in Europe; it
seeks more control over the value chains in which their main
commercial enterprises participate and increased access to
technology as well as more political and economic influence.
Over the past ten years, China has acquired more than
350 European companies. Though observers have long
discussed the possibility of Chinese efforts in Europe
changing from benign to malignant intentions, it is only
recently that the issue has been forced into the open. The
EU is beginning to address China’s propaganda efforts,
trade practices, attempts to extract strategic information
and technology from European companies and other
endeavors to weaken EU unity.
There is no unified European position toward China. Some
countries speak out against Chinese policies in the South
China Sea but benefit in many ways from their economic
relationships with China—including Germany, whose biggest
export market is China. Others, such as Hungary and
Greece, reciprocate economic assistance they receive
from China by watering down or vetoing EU resolutions
against Chinese policies. China has bilateral relationships
with almost every nation in Europe, as well as with regional
bodies within Europe and with the EU itself. Recently,
the European Commission officially re-categorized its
relationship with China to one of “systemic rival.”
European countries that have strategic partnerships with china
Belarus Czech Rep. Denmark France Germany Greece Hungary Ireland
Italy Poland PortugalSerbia SpainUkraineUnited Kingdom
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Influence and counter-influence in eastern europe
In 2012, China established an economic working group with
16 former communist and socialist countries in Central and
Eastern Europe known as “16+1.” Supporters of the bloc view
it as a way to build lower-cost infrastructure without the EU’s
conditional assistance, while opponents believe it represents
a potential threat to EU cohesion. Greece joined in April, and
the group has subsequently become known as “17+1.”
Since 2013, China has financed or co-financed $715 million
of completed projects in the 17+1, and an additional $3 billion
of projects are underway. China sees the 17+1 bloc as an
economic and political bridgehead to Western Europe’s more
developed economies. It has moved some of its product
assembly work into these countries to dodge EU tariffs and
take advantage of lower wages. In a successful exploitation
of the bloc, Hungary vetoed a EU statement regarding the
South China Sea in July 2016 and, together with other bloc
countries, reciprocated counterbalance against the EU.
In response to China’s influence in Eastern Europe, the
EU has intensified its policy toward the 17+1 bloc and
moderately impacted China’s investments in the region by
implementing new screening rules to ensure economic deals
follow EU guidelines regarding single-source contracts and
open tenders. For example, the EU implemented the Berlin
Process in 2014, which helped counter Chinese progress by
improving EU integration with Western Balkan countries.
The Belgrade-Budapest (bullet train) railway is one
example of how the EU has stalled Chinese investments and
development in Eastern Europe. The railway was considered
a flagship example of the 17+1 economic partnership;
however, it has been delayed because of pressure from the
EU regarding the competitiveness of the initial tender. To
this point, construction of the railway has only occurred in
Serbia, which is not a EU member and therefore not subject
to EU regulations. The Maxar satellite imagery on the next
page depicts current construction of the railway in vicinity
of the village of Čortanovci, Serbia.
17+1 Countries
Planned Belgrade-Budapest Railway
Model of a Chinese Bullet Train (Forbes)
CHINA’S 17+1 in europe
POLAND
LITHUANIA
LATVIA
ESTONIA
CZECH REP.
SLOVAKIAHUNGARY
ROMANIA
BULGARIA
GREECE
MACEDONIA
ALBANIA
B&H
CROATIA
SLOVENIA
SERBIA
MONTENEGRO
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Dual tunnel entrances / exits
october 1, 2017 | worldview-3
Railroad construction, Čortanovci, Serbia | october 14, 2018 | worldview-4
Railroad construction, Čortanovci, Serbia | NOVEMBER 6, 2018 | GEOEYE-1
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Mounting trade deficits within THE 17+1 bloc
Less than 3% of total Chinese foreign direct investment in
Europe is allocated to Eastern Europe. Despite this, China is
still one of the most significant investors in the poorer and
more underdeveloped eastern region of Europe.
Many within Europe view China’s efforts in Eastern Europe
as part of a plan to exploit or weaken the EU over time. The
Chinese themselves refer to their policy in the region as a
“South-South” partnership, similar to their infrastructure
loan efforts in Africa and other developing regions. These BRI
efforts in developing areas are often characterized as “debt
traps” in which the target country signs on to infrastructure
projects at rates they cannot afford over time.
Just like their Western European counterparts, 17+1 nations have
complained about the uneven trade rules between their countries
and China. Many of these countries run deep trade deficits with
China, which (according to the EU) has 25 trade and investment
barriers to external economies. Within the 17+1 group,
Chinese investment is heavily targeted at the manufacturing,
construction, and transport sectors—areas in which many
Eastern European countries are particularly deficient.
The following map depicts a bivariate analysis of European
countries’ gross domestic product (GDP) and trade deficit with
China as percent of GDP. The analysis highlights the degree
to which Eastern European countries are becoming more
economically intertwined with China.
17+1 Countries
bivariate analysis: gdp AND trade deficit with china as a percentage of gdp
Low High
Low
High
Trade Deficit w/China (% of GDP)
GD
P
BelarusBosnia & Herz.Czech. RepublicEstonia Moldova Montenegro SlovakiaSlovenia
High Trade Deficit and Low GDP:
NetherlandsPoland
High Trade Deficit and Moderate GDP:
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FILLING ACTIVITY
CONSTRUCTIONBARGE
DREDGEBARGE
2014PORT EXPANSION, PIRAEUS, GREECE | MAY 21, 2014 | geoeye-1
The success of PIRAEUS, GREECE: AN EMERGING TRANSSHIPMENT HUB
Despite China’s inability to fully capitalize on its 17+1
economic partnership to this point, it has been incredibly
successful with specific investments made in the Grecian
port city of Piraeus. This is particularly important because
more than 90% of trade between Europe and China still
occurs via sea. Continuing Chinese investments in the port
and long-range plans to connect rail networks to the port
have the potential to redraw the economic and political
maps in the region.
Piraeus is seen as one of the only BRI projects that has
proven unambiguously beneficial for both China and the host
country. In 2008, Chinese state-owned COSCO signed an
agreement with Greece to operate and expand two piers at
the Piraeus container terminal. Since 2008, Piraeus’ traffic
has increased by 200%—making it Europe’s 7th busiest port.
In 2016, COSCO acquired 51% of the shares in the Piraeus
Port Authority, a move that alarmed many in Europe. COSCO
now has four subsidiaries in Piraeus that control the entire
port. Besides container terminals, COSCO is expanding the
port’s cruise ship infrastructure and further increasing
intermodal capabilities. COSCO also has a plan to integrate
Piraeus with regional railways to Budapest and through
Central Europe to Hamburg, Germany.
The following time-series satellite imagery highlights the
growth and development of the port in Piraeus.
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LAND RECLAMATION NEARING COMPLETION
2016
2019
DREDGING ACTIVITY
NEW QUAY FOUNDATION CONSTRUCTION
*The new container facility adds approximately 430,000 square meters of new container handling and storage to the port facility
PORT EXPANSION, PIRAEUS, GREECE | APRIL 6, 2016 | WORLDVIEW-3
PORT EXPANSION, PIRAEUS, GREECE | APRIL 2, 2019 | geoeye-1
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Low High
Density Major ports where China has acquired ownership stakes
Duisburg, Germany (world’s largest inland port in both size and volume)
mapping chinese investments across europe
Although China is a major investor in Eastern Europe, the vast
majority (roughly 97%) of its foreign direct investment (FDI)
to Europe is directed towards the more developed economies
in Western Europe. Chinese investment is typically hard to
identify because it is routed through notorious tax havens like
Hong Kong, the Channel Islands and others.
To help overcome this lack of Chinese transparency,
European economic and FDI feature classes from Maxar’s
Human Landscape datasets were compiled and analyzed.
Each dataset and feature class is an aggregate of specific
investments and acquisitions reported in news media and
other open data sources; it is not a comprehensive list of
all Chinese investments and acquisitions because of the
complexity and opacity of China’s investment strategy.
The map below provides a density analysis of Chinese
investments and acquisitions in the automobile, construction,
manufacturing, technology, and transportation industries
across Europe. The density analysis shows that Western
Europe’s industrial heartland is a major investment focus for
China, and that Chinese companies have also invested and
acquired ownership stakes in major shipping ports.
One location of particular importance to China is Duisburg,
Germany. Located at the intersection of the Rhine and Ruhr
rivers, Duisburg is the world’s largest inland port. While the
city has some of Germany’s worst unemployment numbers, its
status as western Europe’s main rail hub and its proximity to
the major ports of Belgium, the Netherlands, and Germany have
made Duisburg one of the most important cities in China’s BRI.
density analysis of chinese investmentsAND acquisitions since early 2000’s
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duisburg: China’s German City
Many analysts note that China sees Duisburg as its
“gateway to Western Europe.” This holds true for both
sea and rail transport: transit from Chongqing, China to
Duisburg takes 45 days by sea and only 13 days by rail.
As a result of Duisburg’s growing importance, Chinese
investment in the city has risen in recent years—there are
now more than 100 Chinese businesses present.
In 2018, Duisburg received 6,300 trains of goods from
China—a number that is expected to rise. More than 80%
of trains from China to Europe make their first stop in
Duisburg before being sent to their final destinations,
including regional ports like Zeebrugge, Antwerp, and
Rotterdam. For every two trains Duisburg receives from
China, only one full train makes the return trip—a point of
contention for European companies and governments.
The following satellite imagery shows two recently
constructed warehouses at the Duisburg container
shipping facility.
China’s multi-sector European investment strategy has
prioritized key technology with dual-use capabilities. The
most significant and visible example of this is Huawei, a
Chinese technology firm that provides telecommunications
infrastructure and equipment. A leader in 5G development,
Huawei provides cheaper products than comparable
European companies like Nokia and Ericsson. The company
is firmly entrenched across Europe, which is its second
largest market, behind only Asia. Europe comprised 28% of
the company’s revenue in 2018, and its telecommunications
equipment has been sold to every European government.
Concerns are mounting regarding Huawei’s links to the
Chinese government and its capacity to collect western
communications data and control network connectivity.
The company is at the center of trade tensions between
the US and China. The Trump administration has sought to
prevent Huawei from being allowed to build EU countries’
5G networks, and recently successfully pressured Google
to end support for its Android operating system on Huawei
phones (with companies like EE and Vodafone following
suit). These moves will likely weaken Huawei’s profits in
Europe, but numerous NATO and EU members will likely still
adopt Huawei technology—a lingering concern in Washington
and other Western capitals.
2019
Huawei Smartphone Store (Forbes)duisburg, germany | april 1, 2019 | worldview-2
Huawei: A POSSIBLE telecom trojan horse
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CONCLUSION
Chinese trade and investment in Europe have increased
exponentially over the last decade. However, this
development has been mostly a one-way street and carries
worrisome influence.
The backlash against China’s interests in Europe is not
currently coordinated or firm enough to reverse the
growing Chinese dominance over European politics and
economics. Eastern Europe, contested for decades by the
West and Russia, is now being courted by a third great
power. China’s investments in the underdeveloped regions
have had an overt effect on public opinion across the
continent, increasing political and cultural influence within
Eastern Europe.
Western European governments are concerned with
China’s intentions and alarmed by the volume of Chinese
acquisitions of Western European companies. In addition
to giving China access to technologies it cannot produce
domestically, these purchases have fostered close
relationships between the Chinese and European business
and political elite—making it much easier for China to
wield influence. And despite warnings from defense and
intelligence agencies, controversial Huawei is likely to
continue providing essential communications infrastructure
across the region.
As Chinese investment becomes more integrated into
European infrastructure—and presumably harder to
distinguish from domestic initiatives—tools like Maxar’s high-
resolution satellite imagery and derived datasets, such as
Human Landscape, will become increasingly more valuable to
policy-makers and commercial entities whose interests are
at frequent odds with China’s BRI goals.
Undecided
Limited
Open
position towards HUAWEI 5g infrastructure across europe
Open:Czech Rep.FinlandHungaryItaly PortugalRomaniaRussia SerbiaSlovakiaSpain
Limited:FranceGermanyNetherlandsSwedenUnited Kingdom
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