This paper
analyses China’s plans for the New Silk Road and the related Free Trade
Agreements (FTA) that it seeks with strategic trade partners in Eastern Europe.
The New Silk Road refers to China’s One Belt One Road, or Belt and Road Initiative that was launched in late 2013
to develop infrastructure for new trade routes on
land, air and sea. Being part of China’s economic
strategy, the geographical scope of the initiative is ambitious with 64 participating countries. The
land routes include the “Silk Road Economic
Belt” connecting China with Central Asia, Europe, and the Middle East. Infrastructure
development focuses on railways, roads and airports to enhance transport
between the continents
and to speed economic development in the region. The initiative is backed by
the newly established Asia Infrastructure Investment Bank (AIIB) to finance the planned
large-scale projects.
Led by the highest levels of the government, the initiative
is facilitated
by engaging in trade and investment agreements with trade partners along
the New Silk Road.

The aim of this paper is to assess the
prospective effects of these
plans on the regional orientation of China’s foreign trade. Drawing from data from different sources, such the World
Trade Organization, Ministry of Commerce of the PRC, and personal interviews
with representatives Finnish support organizations in China, the analysis
focuses on the current state of China’s concluded and ongoing FTA negotiations
with Eastern European countries.

It is found
that while most of China’s 15 existing FTAs in force are with Asian trade
partners, it has recently launched negotiations with Moldova, and has already
an FTA in force with Georgia since the beginning of 2018. In addition, China
has negotiated on trade and economic cooperation with the Eurasian Economic
Union that comprises Russia, Belarus, Armenia, Kazakhstan and Kyrgyzstan. These
FTAs, if concluded, would support China’s trans-boundary projects to be financed through the AIIB in addition to providing a transnational
framework for the initiative at both political and business levels. The New Silk Road has brought a strategic focus to the
Chinese government’s “go out” initiative that encourages Chinese companies to
search for new markets and investment opportunities abroad. Trade
flows between China and Europe through the Eurasian continent are expected to
grow because China and the European
Union
are the two biggest markets of
the initiative.