The European Union (EU) is following China's plans to develop a New Silk Road and a Maritime Silk Road with considerable interest. The two projects have major geostrategic, political and economic implications that the EU (and the US) cannot ignore.

During his visit to the EU in spring 2014 Chinese President Xi Jinping informed EU leaders about Beijing's initiative to deepen connectivity between East Asia and Europe via the New Silk Road (also known as the Silk Road Economic Belt) and the Maritime Silk Road (MSR). EU leaders expressed interest in the initiative noting that it was very ambitious and would take a great deal of time and resources. The final communique stated:

In view of the great potential to improve their transport relations, both sides decided to develop synergies between EU policies and China's “Silk Road Economic Belt” initiative and jointly to explore common initiatives along these lines.

In the intervening nine months Xi's initiatives are developing rapidly with China announcing a number of major infrastructure projects to support the MSR. China has stated that it plans to create a $16 billion fund to build and expand railways, roads and pipelines in Chinese provinces that are part of the planned Silk Road Economic Belt. The massive investments will help boost economic development in China's poorer inland regions, a key goal of the MSR initiative.

Meanwhile, China is also encouraging its state-owned enterprises and banks to support infrastructure development along the two routes. This is in addition to the substantial funds that China had already promised to Silk Road partners. For example Beijing has promised $1.4 billion for developing port infrastructure in Sri Lanka and over $50 billion to support infrastructure and energy deals in Central Asia. With the establishment of China's new Asian Infrastructure Investment Bank (AIIB), we can expect to see even more money flowing into the region to shore up infrastructure capabilities.

To date there are few concrete details about the MSR such as which agency will take the lead. But the initiative appears to envisage a system of linked ports, infrastructure projects and special economic zones in Southeast Asia and the northern Indian Ocean. Perhaps of equal or even greater significance is the development of new production and distribution chains across the region, with China at its centre.

The EU pays close attention to Chinese aid policy because it sometimes conflicts with its own development goals. Chinese outreach as regards the MSR has encouraged other countries such as India and Japan to increase their development assistance to the countries in South and Southeast Asia.

The EU is also watching to see if and how China exploits the Silk Road Economic Belt and Maritime Silk Road to increase its influence. Most countries throughout history, especially the European imperialists, have used trade to boost political influence. If and when completed, the Silk Roads would boost China's trade effectively with the whole Eurasian continent. China would hope that many if not all countries along the Silk Roads would have a more favourable image of China and its policies – an example of soft power in operation.

Sri Lanka may now be China's closest strategic partner in the region. Since the end of Sri Lanka's civil war there has been significant Chinese investment in the country. Colombo has been keen to cultivate Beijing as an economic partner to drive development and as a diplomatic partner to help fend off international pressure over human rights issues. Sri Lanka has now cast itself as China's primary partner in the MSR initiative and seems ready to allow Chinese naval vessels privileged access to its port facilities. Apparently as part of the MSR initiative, China has been invited to take over management of a new and enlarged Phase II development of Hambantota port, which will include berths dedicated for Chinese use.

China has also provided naval support for the EU-led anti-piracy campaign in the Gulf of Aden (Operation Atalanta). This is an important transit route for container traffic between Europe and China and a signal of Beijing's willingness to share international responsibility for freedom of navigation on the high seas, a burden largely borne by the US navy. Other potential choke points for Chinese trade are the Malaccan straits and the South China Sea.

As the Chinese MSR initiative involves many countries with which the EU has a partnership it is clear that Brussels will follow developments closely to assess the likely positive and negative implications.

There could well be implications for trade relations and possibilities for joint activities. China is already discussing related infrastructure projects with the central and east European countries under the 16+1 format. There will also be problem areas not least in the different approaches the EU and China have to financial assistance to third countries.

But the message from the EU side is clear – a desire to work together with China wherever and whenever possible for mutual advantage.

CAMERON, Fraser Mctaggart

(Director, the EU-Asia Centre and a Senior Advisor, European Policy Centre)