China tries softly-softly approach in Eastern Europe

Reports suggest that China may be planning to take a more low-key approach to the annual 16+1 summits that are a source of irritation in the EU

Viewpoint
Illustration by Sara Sen
Illustration by Sara Sen

THERE are reports that China wants to scale back its summits with Central and Eastern European countries (CEEC) and take a lower profile approach to its activities in the region at a time when the annual meetings are causing irritation in Brussels.

There have been a series of high profile 16+1 summits, beginning with Warsaw in 2012, then Bucharest 2013, Belgrade 2014, Suzhou 2015, Riga 2016 and Budapest 2017. This year’s event is scheduled to be held in Sofia.

But an international media report quotes European diplomatic sources as saying that the Sofia summit might be pushed back into 2019 and could be a bi-annual event in future, with China wanting to concentrate more on bilateral relationships, in parallel to the 16+1 framework.

Openly projecting its influence at high profile meetings at a time when it is facing growing scrutiny from the European Union on takeovers of EU companies by Chinese entities might seem too provocative and the diplomatic sources suggest that China is looking for a more low-key approach.

However, this has not been confirmed on the Chinese side. During the Ministry of Foreign Affairs regular press conference on March 13, spokesperson Lu Kang said that he had noted the relevant report but had not heard of anything about changes by the Chinese side.

“The rapid development of China-CEEC cooperation cannot be achieved without the guidance of the leaders' summit,” he said. “At the end of November last year, the sixth 16+1 summit reached the consensus on Bulgaria hosting the seventh leaders' summit. China attaches great importance to this and remains in close communication with relevant countries on the preparations of the summit.”

In addition to China, the 16+1 members are Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Macedonia, Montenegro, Poland, Romania, Serbia, Slovakia and Slovenia.

This cross-border EU-plus-non-EU countries make-up has been a source of friction with Brussels. One particularly controversial project is the Chinese-sponsored high-speed rail line which will run from Belgrade, across the EU border, and into Budapest.

The relationship between Brussels and some CEEC countries, notably Poland and Hungary, is currently strained. This could also be viewed as a problem by China, which does not wish to get dragged into other countries' disputes with their neighbours and may prefer to prioritize its relationship with the dominant EU countries such as France and Germany.

Last November's summit in Budapest was an illustration of the kind of tensions that can arise. The relationship between Prime Minister Viktor Orban of Hungary and Brussels is openly hostile at present, notably because of Hungary's refusal to take in refugees.

The Budapest summit was attended by Chinese Premier Li Keqiang, and gave Orban an opportunity to make it clear to the EU that he has other partners that he can cooperate with and can ignore pressure from the EU.

Berlin-based think tank Mercator Institute for China Studies (MERICS) suggests in a blogpost that there are a number of different reasons why China might wish to make some changes to the 16+1 initiative. But having noted that the summits are viewed as divisive by Brussels, MERICS also suggests that perhaps there is not enough progress being made on projects actually under construction.

Work on the Belgrade to Budapest railway has been very slow, though initial construction is now underway around Belgrade. Brussels made it clear that EU public tender rules must be observed for the Hungarian stretch of the line.

In Montenegro, China Communications Construction Company (CCCC) unit China Road and Bridge Corporation is working on the motorway between the port of Bar and the town of Boljare on the Serbian border. The first section should be open in May 2019. The entire 165-kilometre motorway across Montenegro is costing US$900 million, most of which is being provided as a loan from China Eximbank.

It will eventually connect with a length of new Serbian motorway to the capital Belgrade, in which CCCC is also heavily involved.

Some of these road and rail projects will eventually link up with the Greek port of Piraeus, which is owned by China Ocean Shipping Group (Cosco).

However, given all the hype surrounding the Belt & Road, these infrastructure projects are not particularly large in scale.

MERICS also cites China’s own official data which suggests that as of June 2017 roughly 6.7 billion euros of Foreign Direct Investment had flowed into CEE industries, including machinery equipment manufacturing, chemicals, telecoms and new energy. Taking into account the size and output of CEE economies, the investment is significant, but it pales when compared to Chinese investments in Western EU member states. Between 2000 and 2016, Germany alone saw an inflow of 18.8 billion euros of Chinese FDI.

At the Budapest Summit last November Bulgarian Prime Minister Boiko Borissov greeted the decision that Sofia will host the seventh Meeting of Heads of State and Government of the countries of Central and Eastern Europe and China in 2018.

“I am grateful to Chinese premier Li Keqiang, Prime Minister Viktor Orban, to each of my colleagues for their support for Bulgaria to host the next summit on the 16 + 1 initiative,” said Borissov. “Investments from China are precisely what I have always said will be beneficial for the Balkans – infrastructure projects.”

Bulgaria currently holds the Presidency of the European Union, which rotates between all the Member States on a six-month basis. Having only joined the EU in January 2007, this is its first Presidency.

Lilyana Pavlova, the Bulgarian government minister heading up the EU Presidency, has EU expansion firmly on the agenda for the May 17 Summit in Sofia.

On 6 February the European Commission unveiled its strategy in a document titled: “A credible enlargement perspective for and enhanced EU engagement with the Western Balkans.”

EU foreign policy chief Federica Mogherini presided over the strategy launch in Strasbourg in early February. The strategy holds out the prospect that both Serbia and Montenegro could “potentially” be ready to join the EU by 2025. It also offers increased support for the four other candidates.

The six potential accession countries are Serbia, Montenegro, Bosnia and Herzegovina, Albania, Macedonia, and Kosovo. They are keen to join the EU but are cautious about whether it will ever eventually happen, especially given the long wait for Turkey going back decades, which is not even a realistic accession candidate anymore.

This scepticism about whether accession is a realistic goal makes governments more inclined to get involved in the Belt & Road initiative. Five of the six accession countries are members of the 16 +1.