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China – Central Europe: an intensified rapprochement through the 16+1 initiative

Reading Time: 8 minutes

By Ferenc Almássy.

Not everybody likes the rapprochement between China and Central Europe. Wishing to take its future in its own hand, Central Europe is looking for diminishing more and more its dependence as a peripheral zone of Western Europe and turns inter alia towards China.

Sofia, Bulgaria – Between the 29 June and the 7 July, the 7th summit of Central and Eastern European countries (16…) and China (…+1) and the 8th economic forum China-CEE took place in Sofia, Bulgaria. The 16 European countries of this platform are Bulgaria, Croatia, Czechia, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia, all members of the EU, as well as Albania, Bosnia-Herzegovina, Macedonia, Montenegro and Serbia.

The 16+1 initiative is not a geopolitical platform but a win-win cooperation based on the market laws,” explained the host of the forum, the Bulgarian Prime Minister Boyko Borisov, as well as the Chinese Prime Minister who wanted to appear reassuring. “Some say that such a cooperation might divide the EU but it is not true,” insisted further Li Keqiang. And yet, the Western part of the continent and Brussels are worried about this 7th summit of the CEE leaders with the Chinese Prime Minister.

This block of the 16 reminds somehow the former Eastern block or at least the satellite countries of the USSR that lived half a century long under Communism and that were separated politically, culturally and physically from Western Europe. A separation that is still marking the minds even twenty five years after the “European reunification” within the Euro-Atlantist block. On the migration question in particular, two blocks bearing two opposite visions are facing each other. Both are clearly delimited by a fault line comparable to the one that the Iron Curtain was drawing through Europe.

China seems to have known how to take advantage of the existence of those two Europes or at least to take note of it: while establishing this platform of economical cooperation, China relegates the European Union to a third party and promotes a direct dialogue with the government leaders of a region she considers to be economically and politically quite homogenous and unitary, and first of all, that she considers to be a key piece in its Belt and Road initiative.

Another version of two-speed Europe?

If the CEE countries have in common to have endured communism during 50 years, that is not the only point that unites them. Throughout the last millennium, the Balkan and Central Europe were permanently facing the German/Nazi, Ottoman/Turkish and Russian/Soviet imperialisms. From those painful experiences, all the Central European nations have came to the same conclusion: to organise themselves during this unprecedented period of peace in order to get back their independence.

With the collapse of the USSR and the absorption of the CEE countries into the Euro-Atlantic block (EU, NATO, …), a new situation has taken place. Progressively, the 16 CEE countries are joining the NATO while in a time where wars have taken on a different face, the military threat is dimming. And for those that have become members of the EU, an historical opportunity appeared to them: speaking with one single voice within the institutions of the Union, they were able to block the projects of their Western partners, to impose their topics on the negotiation table and even to tilt the playing field in their favour. That is what the experience of the Visegrád Group (V4) illustrates successfully.

The V4 spoke many times about a two-speed Europe. Denied at first by the Germans and the French, the project is assumed now and regularly discussed about: the core of the EU wants to abandon the periphery, or rather to relegate it to a secondary role within the budget and decisions. A project that the V4 and the concerned CEE countries vehemently criticise.

But when it is about working with China for a more extensive development of the Central European and Balkan region without the West to have a say, one would be tempted to say that a two-speed Europe finally does not grieve the CEE countries that much. A brief overview might lead to that conclusion. But reality is a little bit more complex.

If the CEE countries take this opportunity, it is also because, despite of the protests of the Germans and the French, the CEE countries within the EU still receive only 2% of the Chinese investments in the EU. Without any surprise, the main beneficiaries of those Chinese investments are nowadays the United Kingdom, Germany, France and Italy. In contrast, the US and Western Europe represent 90% of the investments in the CEE countries.

So it is first of all about using the 16+1 platform in order to rebalance the situation. That is at least the point of view of the Central Europeans.

Strong will of the CEE countries and mistakes of the EU

Many experts speak about the end of the transatlantic commerce like we were used to it. Donald Trump, on his side, sharply criticises the European Union while he is taking protectionist measures himself. China, on her side, imposes herself more and more as the champion of free market.

Within this new and surprising context, Central Europe is seeking for being able to come out of the domination of the weakened European core. That is how the Three Seas Initiative is trying to develop infrastructures of transport and energy on a North-South axis within the region while collaborating more closely with the US. That is also the reason why some countries are driven to open a dialogue with Russia and even to ask her to invest despite of the point of view of Brussels and the European sanctions. And that is also the reason of this opening towards China.

Central Europe is hardly coming out from its inferiority complex towards Western Europe and knows that China might be a key element of its emancipation. With her New Silk Road project, China has several goals: On one side, to import high quality products in order to respond to the explosion of the qualitative demand of her middle and upper classes that is inflated by an enormous annual growth of her GDP (6,7% in 2016). And on the other side, to become the worldwide economical number one, particularly thanks to her colossal project of New Silk Road.

This immense network of infrastructures aims to connect the whole Eurasia with Africa and to guarantee to China a direct and controlled access to 70% of the markets of the planet.

That means several things for Central Europe:

  • Development of important infrastructures (Danube-Oder-Elbe channel, high-speed train line Athens-Belgrade-Budapest, …)
  • Connection to the main commercial road in the world, coming out from the European periphery (using the harbours of Piraeus and Constanța in order to bypass Hamburg and Rotterdam, …)
  • Opening of important export markets (the CEE countries are also important agrarian countries, which products are less expensive than the ones from the West but benefiting of the label “Europe” in China…)

From the point of view of the EU, the question is however more complex. The uncertainty linked to Trump’s policy and declarations as well as the geographic and historical ties between Europe and Asia bring the Western European chancelleries to hesitate. Concerning the Iranian issue, France particularly tried to soften the position of Washington. But without any success.

One day before the China-EU summit – on the very day, when Trump and Putin came together – that took place on the 16 July 2018, the president of the United States of America even declared that the European Union was his biggest “foe” from an economical point of view, besides Russia and China. Beyond those declarations, Donald Trump withdrew his country from the Vienna and Paris agreements (respectively over the Iranian nuclear program and climate issues). But all the more, Donald Trump imposed taxes on steel and aluminium against the EU. And without even speaking about his admonitions to the NATO members who do not respect their commitments on the military budget.

So the EU has also all reasons to lead an opening policy towards the East but the weakness of the bureaucracy in Brussels practically reaches its limits when it comes to geopolitics. And that is Germany that then reacts as a State.

Germany is vigilant

For Germany, there is no way Central Europe would escape. After the rise of the Visegrád Group as a real “trade union of the German hinterland”, the foundation of the Three Seas Initiative that threatens its energetic agreements with Russia, all that makes a lot for Germany, which economy is based to a large extent on its exploitation of the cheap and highly qualified Central European manpower.

So it is not a hazard of the calendar if Li Keqiang went to Berlin after the 16+1 summit. During her visit to Beijing in May 2018, the German chancellor Angela Merkel had expressed her concern in front of the consequent increase of Chinese investments and projects in Central Europe and the Balkans. So far that it had been even mentioned that Germany might join the negotiations of the 16+1 platform (which would then become 1+16+1 …?) as a third party.

Some observers explain that Germany and China would have an interest to work together for the development of the CEE countries – for the reasons we just evoked. But while the multiplication of the infrastructures would indeed be profitable for the German companies, the increase at short term of the Chinese capital in Central Europe does not really pleases Berlin. This understanding then seems to be very hypothetical while the German pragmatism rather implies that Germany’s interest for the 16+1 would be much more a will of control on the region.

The market changes, China adapts herself

During a long time, China was seen as the workshop of the world; every European did associate the inscription “made in China” with low quality. But in parallel to the implementation of the Belt and Road – or New Silk Road –, China has been able to initiate an adaptation. That is gone with Chinese low-cost, now the Chinese organic and high-tech products are incoming.

In last June I have been invited by the organisers of a little forum presenting the Yunnan province to Hungarian journalists and investors. The success of this confidential event was little, yet the goals are ambitious: China wants to get a good part of the organic market in Europe, and Central Europe might be the first to benefit of it. Yunnan, a region of highlands with a paradisiac climate, was not industrialised and therefore is not polluted like many other regions of China. In consequence, China is going to use this province, where the exceptional climate allows two or even three harvests per year for producing massively quality products like tea, coffee or exotic fruits.

The development plan of Yunnan is a good example of the Chinese global strategy. China wants to diversify her productions, to reach more markets, and like we just said before, also to increase her importations in order to respond to the rising expectations of her wealthy middle classes that are growing demographically.

Concerning the plan for renewable energies, China is also eager to make up the leeway. As Emmanuel Dupuy explained it in the magazine Atlantico: “the half of the electric cars sold in the world comes from China, 15% of the cars in circulation in China are already electric ones by now. China produces 1400 TWh of electricity (while the USA only produce 530 TWh) thanks to her massive investments in renewable energies (particularly in solar energy, where China is currently producing most of the solar panels and windmills sold worldwide)”.

But then, is the New Silk Road a good or a bad thing?

From a Central European point of view, the New Silk Road is a very interesting perspective. It is not a hazard if all the 16 CEE countries have answered positively to the invitation of China. Within a more and more multipolar world, and given the growing tensions with the other half of the European continent that is entangled in a deadly Liberalism, the increasing implication of China in Central Europe, developing infrastructures and bringing capitals, is a good thing. For Central Europe, integrating into the New Silk Road project will not be without any consequences. The adaptation of the West to this potential new situation has to be watched closely. Let us not forget that the encounter of the kings of Poland, Bohemia and Hungary in Visegrád in the 14th century – hence the name of Visegrád Group for the cooperation begun in 1991 between Poland, Czechoslovakia and Hungary – took place first of all in order to find a solution to the usage of staple right by Vienna.