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Visitors walk past a wall with a map showing the species of peony in Belt and Road Initiative countries at a horticultural exhibition at the Beijing Expo 2019 in Beijing.

The European Union will invest some 300 billion euros ($340 billion) on infrastructure and other projects as part of Global Gateway, a new venture from the 27-country bloc designed to compete with China's vast and influential Belt and Road Initiative (BRI).

A draft proposal from the European Commission, seen by RFE/RL, outlines Brussels' plans for the ambitious initiative, which will rely on public investment and the private sector to build infrastructure intended "to strengthen digital, transport, and energy networks" around the world and invest in "projects that can be delivered with high standards, good governance, and transparency."

The plans for Global Gateway, which will be revealed on December 1, seek to mobilize a sum up to $340 billion that will be invested by 2027 and leverage resources from the EU, European financial institutions, development banks, and member states.

The draft document goes on to add that the initiative will focus on building projects like fiber-optic cables, transport corridors, and "clean-power transmission lines" that will offer "attractive investment and business-friendly trading conditions, regulatory convergence, [standardization], supply-chain integration, and financial services."

European Commission President Ursula von der Leyen (bottom right), European Council President Charles Michel (top right), German Chancellor Angela Merkel (bottom left), French President Emmanuel Macron (bottom center), take part in a videoconference with Chinese President Xi Jinping.
European Commission President Ursula von der Leyen (bottom right), European Council President Charles Michel (top right), German Chancellor Angela Merkel (bottom left), French President Emmanuel Macron (bottom center), take part in a videoconference with Chinese President Xi Jinping.

The stepped-up plans from the EU come as many Western countries are looking to play a larger role in funding infrastructure across the developing world and roll back the BRI, which has become an important strategic tool for Beijing to extend its influence since its launch in 2013.

Under the guise of the BRI, China has channeled hundreds of billions of dollars into foreign infrastructure, boosting trade and clearing the way for it to forge political and economic links around the world, from Latin America to Africa and Central Asia.

The EU plans do not mention the BRI, Chinese leader Xi Jinping's signature foreign-policy project, by name, but Global Gateway is framed as an alternative program that the draft says will focus on providing an "ethical approach" to infrastructure financing that is "values-based" and relies on fair and open competition.

"Global Gateway will invest in international stability and cooperation and demonstrate how democratic values offer certainty and fairness, sustainability for partners, and long-term benefits for people around the world," the draft document states.

Response To The BRI

Launched amid great fanfare by Xi, the BRI has since been supported by international organizations and more than 150 countries -- including many in the West -- as it has expanded in scope from ports, pipelines, and roads to include digital technology, health care, and green energy.

But a combination of growing disillusionment among partner countries with the resulting projects, growing global demand for more investment, and increased unease about the strategic implications of the BRI have opened the door for alternatives to emerge.

"Brussels is trying to differentiate itself from what China has been providing," Jonathan Hillman, the director of the Reconnecting Asia Project at the Center for Strategic and International Studies (CSIS), told RFE/RL. "When it comes to environmental issues, transparency, and sustainability, the EU has a strong and attractive brand that it can leverage."

The BRI has also been undercut in recent years by questions regarding the commercial value of many of its projects, growing worries over murky lending practices, and concerns over it being a vehicle for Chinese control.

Debt and transparency concerns have also shrouded Chinese-funded projects around the world, from Sri Lanka to Pakistan and Uganda to Kyrgyzstan.

Beijing-backed ventures in Hungary, such as a potential Chinese university in Budapest funded by a $1.5 billion loan and $1.9 billion borrowed for a railway connecting Budapest to Belgrade, have faced public backlash over corruption accusations and a lack of transparency over the details of the loan agreements.

Across the Balkans, Chinese projects have been linked to environmental damage and poor labor practices, as well as debt concerns, such as a controversial $1 billion Chinese-funded highway in Montenegro.

According to the draft, Global Gateway has a world-spanning focus, but a European Commission official who was not authorized to speak to the media told RFE/RL that the initiative would prioritize Africa and Asia for investment. The EU plan will also aim to focus on investing into areas around digitalization, health, climate, energy, and transport.

"The BRI raised the stakes and made Western policymakers more aware of the strategic consequences of not being involved in infrastructure," Hillman said. "Beijing has also created an opportunity for higher-quality alternatives through its own mistakes. It's hard to imagine Global Gateway existing if it wasn't for the BRI."

Coordinating Western Plans

The draft also mentions that Global Gateway will aim to align with other infrastructure plans adopted at the Group of Seven (G7) summit in the United Kingdom in June, including U.S. President Joe Biden's Build Back Better World (B3W) initiative.

The U.S. plan aimed to help narrow the global need for infrastructure by working with countries like Australia, India, and Japan, as well as the new EU initiative.

But the biggest obstacle will be how Brussels and its partners can leverage the financial muscle to rival Beijing for infrastructure investment, Andreea Brinza, vice president of the Romanian Institute for the Study of the Asia-Pacific, told RFE/RL. "The biggest obstacle may be the cost of implementing projects [with high standards]," she said. "Developing countries really need infrastructure, but if it's too expensive they can't afford it [and] there will also be profitability issues."

Taken together, the United States, Europe, Japan, and others have far outspent China in terms of funding in recent years as the pace of investment through the BRI has slowed down since reaching a peak in 2017.

Chinese President Xi Jinping raises a toast after a speech at the welcome banquet for leaders attending the Belt and Road Forum in Beijing in April 2019.
Chinese President Xi Jinping raises a toast after a speech at the welcome banquet for leaders attending the Belt and Road Forum in Beijing in April 2019.

How Global Gateway can be coordinated with other programs like B3W and leverage the necessary funds remains to be seen, but the project has high-level backing in Brussels and the $340 billion figure marks a substantial increase from an earlier amount attached to the initiative.

"The EU's biggest challenge will be to find the perfect combination of quality infrastructure and affordable prices," Brinza said. "If the EU [can] blend high standards with affordable costs, it will definitely succeed, especially considering that the BRI is passing through a phase of disappointment and criticism."

Hungarian Prime Minister Viktor Orban (left) shakes hands with Chinese President Xi Jinping during a visit to Beijing in 2019.

With Hungarian Prime Minister Viktor Orban’s close relationship with Beijing becoming a target for the country’s opposition in a tightening election campaign, the government is now trying to distance itself from some of its more controversial China policies.

The new tack from Orban's government comes as Peter Marki-Zay -- a conservative small-town mayor who emerged as a unity candidate chosen by a coalition of opposition parties -- has come to represent what many say is the best chance to oust Orban in more than a decade.

In what is shaping up as a close race ahead of parliamentary elections in the spring, Budapest is adopting a new approach as Marki-Zay has pledged to shakeup the country’s warm relationship with China and take aim at Chinese-funded projects in the country.

“The Hungarian government is now silent about such China-related controversial issues and is trying to emphasize the bright side of [China-Hungary] ties, like the amount of Chinese investment flowing into the country,” Tamas Matura, an assistant professor at Corvinus University in Budapest, told RFE/RL.

Under Orban, who has held office since 2010, Hungary has built close ties with China.

Relations further expanded under the Hungarian leader’s Eastern Opening policy meant to cultivate close ties with Beijing and Moscow to attract investment and economic opportunities for the country.

Since then, Orban has opened the door to a series of controversial Chinese initiatives in the country -- including a Chinese-funded university in Budapest, a railway to Belgrade, and the procurement of Chinese ventilators and vaccines during the pandemic -- that have found themselves in the crosshairs of the opposition over debt and corruption concerns.

With polls showing Marki-Zay neck and neck with Orban’s Fidesz party, the opposition candidate has tried to push Orban’s controversial China-ties into the spotlight and called for a review of Hungary’s relationship with Beijing.

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The opposition candidate has also accused Orban of corruption in negotiating the funding of the Budapest-Belgrade railway, where the government took out a 20-year, $1.9 billion Chinese loan, and vowed to stop interfering with the European Union’s efforts to censure Beijing over human rights concerns in Hong Kong and China's Western Xinjiang Province.

In Brussels, multiple EU officials familiar with the bloc’s China policies told RFE/RL that Hungarian officials have not voiced opposition to renewing sanctions against Beijing over Xinjiang, in large part due to Budapest wanting to avoid strengthening the opposition’s attempts to target Orban over his China ties.

“Everything must be revisited and reviewed and all corruption must be identified,” Marki-Zay told the South China Morning Post. “The Budapest to Belgrade railway and the vaccine procurement must be revisited and must be checked thoroughly by open and independent authorities.”

'Eastern Opening' Meets Marki-Zay

Marki-Zay’s challenge has left the Orban government engaging in a high-wire act at home and abroad when it comes to its China policies.

This shift has been particularly felt in Brussels, where Hungarian officials have been willing to come to Beijing’s aid to court more Chinese investment and maintain diplomatic support over Budapest’s democratic backsliding, which has been the focus of repeated clashes between Hungary and the EU.

Following tit for tat sanctions in March between Beijing and Brussels over China's human rights abuses in Xinjiang, Hungarian Foreign Minister Peter Szijjarto denounced the measures as "pointless, self-aggrandizing, and harmful."

A protester holds a placard depicting Prime Minister Viktor Orban as the late Chinese leader Mao Zedong during June demonstrations in Budapest.
A protester holds a placard depicting Prime Minister Viktor Orban as the late Chinese leader Mao Zedong during June demonstrations in Budapest.

In April and May, Budapest was the only one of 27 EU member states to withhold support for punitive measures in response to Beijing imposing a national-security law on Hong Kong and have since blocked any future measures.

But behind the scenes in Brussels, EU officials familiar with the issue who were not authorized to speak to the media told RFE/RL that Hungary has thus far indicated it will not oppose the extension of the Xinjiang measures as it tries to avoid the appearance of cozying up to China amid the close election cycle.

Hungary also increasingly finds itself as an outlier in Central and Eastern Europe over its relationship with China.

A new government in the Czech Republic has said that it will take a more adversarial stance toward Beijing and the incoming coalition in Germany has also called for reevaluating Berlin’s China policies following Chancellor Angela Merkel’s courtship of Beijing as a partner.

Several countries in the region also welcomed Taiwan’s foreign minister for a landmark European tour in October, while Lithuania has been involved in a tense spat with Beijing over the Baltic country’s ties with Taipei.

Those tensions look set to grow.

On November 21, China downgraded diplomatic relations with Lithuania over the opening of a Taiwanese office in Vilnius. In Brussels, meanwhile, the EU is working on new supply-chain due diligence and anti-coercion legislation that could also target China and fray ties with Beijing.

According to Matura, this leaves the Orban government in an awkward position as it looks to navigate rising anti-China sentiments among Hungary’s neighbors.

Viktor Orban at a summit between China and Central and Eastern European countries via video conference from his Budapest office on February 9.
Viktor Orban at a summit between China and Central and Eastern European countries via video conference from his Budapest office on February 9.

“[This] may increase the importance of Orban in the eyes of China, since he is one of the last friends of Beijing in the whole EU,” he said. “Meanwhile, he can’t be very supportive of China in the middle of the campaign…so, I believe Orban has embraced a wait and see approach [for] now.”

Spring Elections

Hungary’s Chinese-funded projects under Orban have been no stranger to scandal, but analysts say the central question for Marki-Zay ahead of the elections is whether it resonates with the electorate.

“There is definitely an attempt to bring China into the election campaign, but it remains to be seen if it will be successful,” Dominik Istrate, an analyst at the consultancy Kesarev, told RFE/RL.

Corruption concerns have followed the Budapest-Belgrade railway project since it was first proposed in 2014 and the government’s procurement of the Chinese-made Sinopharm vaccine has also been embroiled in controversy over high costs and graft accusations.

However, a plan to build a Budapest campus for Shanghai's prestigious Fudan University has received the greatest public pushback, with an estimated 10,000 people taking to the streets in the capital in June after leaked documents showed the government would take out a $1.5 billion loan from a Chinese bank to cover most of the costs.

Demonstrators gather in front of the parliament in Budapest on June 5 to protest plans to establish a satellite campus for Shanghai’s Fudan University.
Demonstrators gather in front of the parliament in Budapest on June 5 to protest plans to establish a satellite campus for Shanghai’s Fudan University.

Orban has since said he will hold a referendum on the issue, but such a vote faces growing uncertainty.

The Fudan project remains unpopular with voters, with an August poll showing that more than two-thirds of Hungarians oppose the campus. Members of Hungary’s opposition -- including Budapest Mayor Gergely Karacsony -- are also pushing for a nationwide referendum on the campus that can be included on the ballot for the federal elections. But doing so currently faces several legal challenges that could delay it until after the 2022 vote.

While critical of the Chinese megaprojects that were green-lit under Orban, Marki-Zay has also looked to position himself carefully as not being anti-China. The mayor of the small city of Hodmezovasarhely has said that Chinese investment is welcome as long as it is on a “mutually beneficial basis,” and has said that he respects Beijing’s achievements.

The Orban government, meanwhile, has shifted its attention to other issues that may galvanize voters and define the elections.

Pro-Fidesz pundits have already stated that there will be “major U.S. interference” in the 2022 elections and have taken aim at Marki-Zay’s time living in the United States as evidence that he represents foreign interests.

The Orban government has also put forward its own referendum on current legislation that limits schools' ability to teach about homosexuality and transgender issues, which the prime minister has framed as part of an “ideological war” with the EU.

“Ultimately, the election will be a referendum on Orban’s ability to govern and where the country stands after 11 years of Fidesz,” said Istrate. “In the end, the election will come down to domestic political issues.”

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In recent years, it has become impossible to tell the biggest stories shaping Eurasia without considering China’s resurgent influence in local business, politics, security, and culture.

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