China in Central and Eastern Europe: 4 Myths

Dragan Pavlićević, The Diplomat [original article contains links]

Image from article, with caption: China's Premier Li Keqiang attends the 4th Meeting of Heads of Government of China and Central and Eastern European Countries, in Suzhou, China (November 24, 2015).

Debunking four myths about China’s “16+1″ platform with Central and Eastern Europe.

It is not difficult to see why the China-initiated “16+1” platform, grouping together China and 16 countries of Central and Eastern Europe (CEE), has been perceived as an esoteric one. While Central and Eastern Europe commonly refers to the part of the Europe with a shared communist past, the countries in this region have never previously jointly made up a single political community, nor do they share many similarities. In recent times, CEE countries have had vastly different political and economic development trajectories. For example, while the Baltic and Central European countries have achieved a solid level of economic development, the Balkan countries customarily grace the bottom of the rankings indicating levels of economic and political progress in Europe.

Furthermore, the 16+1 platform overlaps with several existing integrative mechanisms and spheres of influence. The CEE members of the initiative include both countries that are members of the EU and NATO and those that do not belong to one or both of these clubs. Among themselves, the CEE countries also significantly differ in how they view and manage their relationships with Russia, another influential regional power. To add to that complexity, many among the 16 countries have underdeveloped economic and political links with each other, while some have complicated and problem-laden bilateral relationships due to historical legacies and various existing disputes. Unsurprisingly given such a complex pattern of multilateral arrangements and mutual relationships in the CEE region, the European members of this group have trouble finding common interests and articulating common policies under the 16+1 framework.

Why then is China grouping together these disparate countries and what is Beijing trying to achieve with the 16+1? Over the years, a set of now widely accepted assumptions emerged to create a narrative that sees the 16+1 framework as a vehicle for China to engineer a sort of a takeover of the CEE region from the EU for its own strategic purposes. In this narrative, China intends to tie the region to itself and use it as a medium to influence the EU from within, primarily to force through favoable policies toward China. For that purpose, Beijing relies on a set of hard and soft power tools, among which the most important is the infusion of cash into the region. The EU, however, is well aware of China’s plot and has adopted a protective stance in order not to let that scenario materialize. This, together with the lack of achievements of the 16+1, has resulted in the initiative stalling and failing.

As China’s President Xi Jinping, fresh from his visit to the Czech Republic earlier this year, prepares to visit Poland and Serbia this month, demonstrating the unprecedented levels of attention China now gives to the CEE region, this narrative needs reconsideration. The intention of this commentary is to challenge this mainstream interpretation by drawing attention to four fundamental misconceptions on which it is founded.

The 16+1 is a threat to Europe. Since its early days, the debate about the 16+1 was framed in the terms of the threat it poses to European unity and the ability of the EU to craft a China policy that would best protect European interests. From this viewpoint, China aims to develop relationships with some or all of the CEE countries to such an extent that the importance of their relationship with China will overshadow the respective countries’ relationship with the EU. These countries will therefore then lobby for and pursue policies that are beneficial for China but undermine the interests of the EU as a whole, and even endanger European values and norms.

This view, however, underestimates the strength of intra-European political and economic integration. The EU dominates the policy outlook of all of the CEE countries to such an extent that an attempt to sow the seed of discord and substantially reorient some of the countries toward China is very unlikely to have appeared as a feasible strategy to China’s policymakers. After all, due to a considerably higher degree of economic interdependence, China looms much larger in the worldview of Western European states, which disproportionately impact the EU policies, than in the outlook of the CEE countries, which wield considerably less influence in Brussels. Chinese policymakers must have surely concluded that the road to get Brussels to do what Beijing wants is much more likely to lead via governments in Berlin, London, or Paris than those in Budapest, Warsaw, or Belgrade.

CEE is Europe’s Gatekeeper. In a positive version of this myth, which is a central ingredient of China-CEE official diplomatic parlance, as Chinese and CEE leaders hail the relationship as special and of the highest strategic importance, CEE is a bridge to Europe in both geographical and metaphorical sense. Cooperation between China and CEE, particularly on developing the region’s transportation infrastructure, will both enable physical connectivity and promote economic integration between China and Europe, including the EU. The negative version of this myth, adopted by many in the EU, including in official circles, views the CEE as China’s Trojan horse, which will provide Beijing with access to the inner workings of the EU and influence on the EU’s policymaking as the region becomes increasingly dependent on the economic exchange with China.

While the first version of this myth is merely a case of positive public diplomacy, the second is a reflection of the China Threat mentality that perceives danger in anything Bejing does. Neither is grounded in reality. To get the right perspective, it is helpful to note that the CEE region was largely absent from China’s foreign policy in the 1990s and most of the 2000s. This was in sharp contrast with China’s relationship with Brussels and the major European powers, which were actively developed and nurtured throughout this period. Consequently, China has many more cooperative mechanisms with the EU, and much more intense exchange on most aspects of bilateral relationships with the non-CEE members of the EU, including much larger trade volumes and dramatically higher flows (both ways) of investment, than it has with the CEE countries. Cooperation on infrastructure projects may be one significant exception, although the economic and political dimensions of such cooperation are still significantly inferior in strength and depth compared to the existing links between China and the non-CEE part of Europe. China does not need either a “bridge” or a “Trojan horse” to get into the EU. It is already there.

The 16+1 lacks achievements. There is palpable frustration on both sides of the China-CEE platform regarding the speed and substance of developments under the 16+1 framework. Many CEE countries find China’s “set menu” offer to finance and build capital infrastructure projects ill-fitted to their needs, and have found China largely unresponsive to appeals to give a larger role to other forms and types of economic cooperation. On the other side, Chinese think tankers and officials are puzzled about the lukewarm response their initiatives, which are perceived as very generous, receive in the CEE countries. Chinese analysts also are frustrated that even those measures and projects that are agreed to in principle are moving too slowly, if at all, toward implementation. There is a shared sense that the platform has been underachieving.

Yet this assumption cannot bear empirical scrutiny. While the depth of economic engagement is uneven across the region, most of the CEE countries saw the arrival of Chinese investments over the last few years, and there is a growing portfolio of Chinese big-ticket infrastructure and developmental projects, equity investments, and acquisitions in the region. Trade is on the way up. Numerous initiatives in research, education, business-to-business, and other domains are operational or underway. Altogether, the number of regular and institutionalized mechanisms under the initiative — a prerequisite for long-term and sustainable development of the platform — is growing by the year, ensuring solid foundations for the future. After all, the initiative is only in its fifth year, and the checklist of developments so far looks fairly impressive if assessed with that in mind.

The EU does not want China in the CEE region. The perceived lack of substantial progress is to a large extent attributed to the defensive efforts of the EU. Brussels is allegedly aware of the dangerous and treacherous Chinese strategy to “divide and conquer” and is also highly concerned about the consequences of China’s growing economic presence in the region for the fortunes of strategic industries and overall health of European economy. The EU has therefore countered by pressuring the CEE countries to refrain from deepening relations with China. Brussels is believed to have successfully used a plethora of measures, such as pressuring CEE leaders through formal and informal channels, or insisting on upholding the EU’s technical and legislative standards, to prevent CEE from deepening relations with China.

While based on unsubstantiated reports, the endurance of this myth is helped by an almost complete lack of public statements on the behalf of the EU regarding the 16+1 mechanism. Yet, again, empirical evidence calls into question whether there is such a strategy, and if there is, whether it has had any success. The scope and depth of China-CEE engagement, as discussed above, is steadily growing. Several deals in sensitive industries, such as nuclear energy and steel, where the EU has valid concerns about the economic, security, and policy-level implications, have gone through, which could not have happened without Brussels’ approval. On a broader front, while the EU countries en masse joined the China-backed AIIB, China has recently become a member of the European Bank for Reconstruction and Development (EBRD). Beijing is also set to significantly contribute to the Juncker plan, the Brussels investment platform for sustained economic recovery in Europe, including in the CEE region. If anything, this series of developments suggests that there is an alignment of the EU’s and China’s development policies and goals, in the CEE and beyond, rather than a rivalry.

Conclusion

This brief analysis suggests that the mainstream doom-and-gloom perceptions of the 16+1 are mistaken. That is not to say that there are not any legitimate concerns about the economic, political, and geostrategic consequences of China’s engagement of the CEE region. On the contrary, the 16+1 is indeed a challenging proposal for all involved and the problems are many and varied. However, China, the CEE countries, and the EU, as the key stakeholders, will inevitably need to engage in more, not less, negotiation and coordination of policies to manage China’s rapidly growing interests in the region. In such a context — and contrary to the assumptions arising from the misconceptions analyzed here — the 16+1 format is unlikely to fail and slip into irrelevance. Rather, it is set to grow in importance over the coming years.

Dragan Pavlićević is Visiting Research Fellow at the East Asian Institute, National University of Singapore, and Lecturer in China Studies at the Xi’an Jiaotong-Liverpool University (from July 2016). He is also Contributing Analyst at the geostrategic consultancy Wikistrat.