Why China Is Wooing Eastern and Central Europe

September 4, 2018 Topic: Security Region: Europe Tags: ChinaEuropeEuropean UnionEconomyInvestment

Why China Is Wooing Eastern and Central Europe

China’s growing presence in Central and Eastern Europe has widened the EU’s East-West divide.

When Donald Trump entered office last year there was speculation that his “America First” foreign policy would corrode Transatlantic relations, and drive Europe and China towards closer cooperation. The 2017 Davos World Economic Forum, which occurred in the days leading up to Trump’s inauguration, was perhaps the high watermark of this sentiment. Xi Jinping, the first Chinese leader to address the annual gathering of global elites, delivered a keynote speech strongly defending free trade, economic globalization and an open international economic system (despite China’s own long record of quasi-mercantilist policies). European elites expressed hope that closer EU-China ties would prop up existing international institutions as they anticipated U.S. foreign policy taking a nationalistic turn. For example, in a January 2017 China Daily op-ed, Fraser Cameron, director of the EU-Asia Centre and a former European Union (EU) diplomat, argued that Europe and China should “make common cause to save the multilateral system from opposing forces in the US.”

As predicted, the first year and a half of the Trump administration saw a Transatlantic rift develop over differences on trade, Iran, and climate change. Nevertheless, U.S.-EU divergence has not driven Europe and China towards closer cooperation as some anticipated. Why not? To begin with, economically advanced European countries such as Germany share U.S. concerns that core elements of China’s trade and industrial policies (IP theft, technology substitution, lack of investment transparency, and insufficient market reciprocity) are economic threats. A more specific impediment to closer China-EU ties is China’s deepening engagement with Central and Eastern European (CEE) countries. This is because China’s expanding presence in CEE states such as Greece, Hungary and Czechoslovakia has deepened a growing East-West divide within the EU itself. On the one hand, CEE states have had mixed reactions to China’s increasing economic involvement in their countries. Initial excitement over trade and investment opportunities, particularly through China’s sprawling transcontinental infrastructure development program—the Belt and Road Initiative (BRI), has been tempered by shortfalls in pledged investment and concerns over Chinese behavior such as opacity and a pattern of attaching political caveats to investments. By contrast, Western Europe’s response has been largely negative. Misgivings about Beijing’s objectives on Europe’s Eastern flank run deep in Brussels, Berlin and Paris.

No element of China’s push into Europe has unnerved the EU more than the 16+1 initiative. Overseen by Premier Li Keqiang, the 16+1 platform convenes an annual summit between China and sixteen Central and Eastern European (CEE) countries. While CEE countries have seized on 16+1 as an opportunity to engage with China; Germany, France, and the EU see the initiative as a Chinese effort to divide Europe for Beijing’s own purposes. For example, an EU diplomat told Nikkei Asian Review that if the initiative is allowed to proceed unchecked it will “split the continent” and preclude the EU from adopting a unified stance towards China.

The “China Plus Many” Model

The 16+1 initiative’s stated goal is to enhance and expand investment, transportation, financial, scientific, educational and cultural cooperation between China and CEE countries. China has prioritized three areas of economic cooperation: infrastructure development, high-technology and green technology. Most of the 16+1 countries are EU members —Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia, but the grouping also includes five non-EU states in the Western Balkans: Albania, Bosnia and Herzegovina, Macedonia, Montenegro and Serbia. The most recent 16+1 summit occurred last month in Sofia, Bulgaria where China and its European partners pledged to deepen diplomatic and economic cooperation .

Although it is unique in the European context, the 16+1 initiative accords with contemporary patterns of Chinese foreign policymaking, wherein Beijing eschews formal alliances in favor of an omnidirectional web of “strategic partnerships.” China analyst Peter Wood has made a valiant attempt at cataloguing the nomenclature Beijing uses to denote its varying tiers of bilateral relationships. These range from terms applied to warm relations that are akin to de facto ententes, e.g Russia is classified as a “Comprehensive Collaborative Strategic Partner” and Pakistan as an “All-Weather Strategic Cooperative Partner.” Other phrases indicate more circumscribed cooperation, for example, Belarus, Iran, France and a host of other countries are “Comprehensive Strategic Partners.” Nevertheless, apart from close friends such as Pakistan or Russia, the labels China attaches to its various foreign partners are rather nebulous, and do not always reflect the actual state of relations. For example, Zimbabwe, a country with which China has a long history of close ties is merely a “Friendly Cooperative Partner”; whereas India, a neighbor with which China has significant differences is a “Strategic Cooperative Partner.” One of the main mechanisms that China uses to seal its myriad partnerships, particularly with small and middle powers, is multilateral fora, which often take the form of “China plus many”. In addition to the 16+1 summit, Chinese and African leaders have since 2006 convened at the triannual Forum on China Africa Cooperation ( FOCAC). The Belt and Road Forum ( BARF) brings BRI participant countries’ leaders to Beijing for meetings with China’s leaders.

The formula of “China plus many” has advantages and disadvantages. On the one hand, it allows China’s leaders, whose time is very limited, to engage with a host of small states’ leaders they might not otherwise have the opportunity to interact with. These multilateral mechanisms also provide a channel for China to pressure smaller states to respect it’s narrowly defined parochial or “core interests,” e.g. its stances on Taiwan or Tibet. However, one weakness of these multilateral frameworks is they are less likely than institutionalized bilateral alliances (e.g. the U.S.-ROK alliance) or multilateral security cooperation regimes (e.g NATO) to engender genuine strategic collaboration. This may not be a problem for Beijing now, but as China’s interests become more global in scope, it may become an issue in the future.

Quid Pro Quo?

In deepening cooperation with China, CEE countries are primarily motivated by economic factors. Many struggling European countries have turned to China as a source of investment, not as a first choice, but as a last resort. For example, while Germany and Greece’s other European creditors imposed austerity measures on Athens beginning in 2010, China bankrolled the Port of Piraeus, now the Mediterranean’s busiest port. It did not take long for China to seek to translate its growing economic clout in Greece, and elsewhere, into political influence. In 2016, Greece, along with Hungary and Croatia—two other significant recipients of Chinese funding, watered down an EU statement on the South China Sea to remove criticism of China’s militarization of the disputed waters. In February 2017, Hungary refused to sign (precluding the EU from signing as a bloc) a letter rebuking China for torture of human-rights lawyers. In 2017, Greece blocked an EU statement at the United Nations that criticized China’s human-rights record.