Spanning the boundaries: infrastructure financing through Chinese bank expansion into the EU

Keywords: Chinese banks, Belt and Road Initiative, financial infrastructure, China, Luxembourg, European Union
Session Type: Virtual Paper Abstract
Day: Tuesday
Session Start / End Time: 3/1/2022 03:40 PM (Eastern Time (US & Canada)) - 3/1/2022 05:00 PM (Eastern Time (US & Canada))
Room: Virtual 25

Abstract

This paper engages with a dual infrastructural setting: the infrastructure building of the BRI, and the emerging financing infrastructure in the EU implemented by Chinese banks. Both settings are sites of geopolitical and geoeconomic contestation and competition, and this paper suggests that building its financial infrastructure is one way to expand and exert Chinese geopolitical influence. Luxembourg has promoted its international financial center as a platform to narrow the ‘global infrastructure gap’ and has become the largest headquarter of Chinese state-owned banks in Europe. Its financial industry serves Chinese banks as a platform to direct capital in strategic asset acquisitions and infrastructure investments. The Luxembourg Stock Exchange is the global leader for listing Chinese (green) bonds, which fund, e.g. projects along the Belt and Road countries. We aim at shedding light on the actors, agencies and mechanisms that are building financial infrastructures to promote and perform infrastructure investments along the BRI countries, especially in Central and Eastern Europe. We find that (Chinese) banks and other investors operate under the conditions of several memoranda of understanding between China and Luxembourg, from which Luxembourg, as key enabler of a favorable financial environment for Chinese banks and firms, does not yet see itself rewarded in its original concession. However, its financial infrastructure, e.g. bonds and investment funds, are key vehicles that allow (Chinese) capital to implement infrastructure projects on the ground and mechanisms, whose future is increasingly questioned against the background of the recent geopolitical frictions between China and the West.