How China Lost Central and Eastern Europe

The article was originally published by Friedrich Naumann Foundation (FNF) in English and German and is republished here with permission.

Central and Eastern Europe’s attention is currently fixed on the Russian invasion of Ukraine. Meanwhile, the perception of China has been shifting as well. If China is regarded as supporting Russia, Beijing risks falling into the category of an explicit threat alongside Moscow.

Since the Russian invasion of Ukraine started, the capacities of most of the Central and Eastern European (CEE) countries have been stretched to their very limits. Countries on the borders with Ukraine deal with floods of Ukrainian refugees. Some organize purchases and transport of military equipment to Ukraine. All of them assess the challenges posed by Russia to the post-Cold War international order. When all eyes are fixed on Russia, China suddenly seems as a distant and far-away power. Yet Central and Eastern Europe have not forgotten China.

The fact that Beijing backed Russia on opposition to the enlargement of NATO in the joint communiqué, signed by Xi Jinping and Putin on the fringes of the Olympic Games in Beijing on February 4, has not passed unnoticed. The cryptographic statement eludes “the Chinese side is sympathetic to and supports the proposals put forward by the Russian Federation to create long-term legally binding security guarantees in Europe.” CEE quickly translated the message as support for Russian demands to reverse NATO borders to the pre-1997 situation. In other words, China backed Moscow’s December proposals in which Putin demanded NATO remove any troops or weapons from most of Eastern Europe, including Poland, Czechia, Slovakia, and the Baltic states.

It is the Economy, Stupid

A decade ago China set up shop in Central and Eastern Europe through its format of cooperation with CEE countries (the so-called “16+1”). China joined other powers historically present in the region, including Russia, Germany, and the United States. The CEE countries originally welcomed China’s interest as they saw it as an opportunity to diversify their mostly West-bound trade routes. What followed was a honeymoon with China. However, it is worth reiterating that the sweeping majority of members of the grouping have not entered the 16+1 platform out of affection for China. They entered due to hard-nosed economic expectations of Chinese investment in their countries.

These expectations, however, have not fully materialized. The overall Chinese investment in Europe continued to fall from 2016 to 2020, with Central and Eastern Europe absorbing a mere 3 percent in 2020. Pre-coronavirus Chinese FDI to Central and Eastern Europe was modest and concentrated in a few countries, with Hungary, Czechia, and Poland at the forefront. The rest of the countries did not receive big investments, especially not in the higher value-added sectors.

The growing disillusionment with the lack of tangible results from the cooperation with China was further accentuated when China addressed political threats to the countries which decided to prioritize relations with Taiwan. The Czech Senate president was warned he would “pay a heavy price” for his official visit to Taiwan in 2020. Lithuania has been targeted by economic sanctions for its decision to open the “Taiwanese Representative Office” – instead of using the common title “Taipei Economic and Cultural Office” – in Vilnius in 2021.

Security Trumps Economy

Ten years ago CEE countries saw China as an economic opportunity. The situation has changed as most of the countries (with notable exceptions of Hungary and Serbia) now understand that economic benefits may be illusionary and that considerable political and security risks stemming from cooperation with China should also be taken into consideration.

Recent China’s decision to back Russia’s claims on the redesign of European security architecture feeds into the region’s growing concerns over China’s intentions. In fact, Beijing could hardly find a more neuralgic point to strike. The CEE countries perceive NATO, and by extension the United States, as a key security guarantor. They prioritize security due to their historical memory, which has been strongly influenced by the experience of being subjugated to Nazi Germany and the Soviet Union in the last century. In an essence, while economic preferences may be debated and restructured as politically fitting, security is non-negotiable.

The Russian invasion highlighted this point, as CEE countries in the vicinity of Ukraine started to re-think their inadequate military spending and contemplate hosting US bases on their territories.

The bold proposals and moves taken by administrations of the Baltic states, Poland, Czechia, Slovakia, and others regarding Russia signal a more proactive and confident foreign policy within the EU. For the countries which were quite often seen as lacking ambitions to shape EU policies, this represents their own rite of passage.

Once they fully embrace the experience, it may not stop with Russia. If China is regarded as supporting Russian goals of pushing NATO back before the 1997 enlargement, it can be expected that Central and Eastern Europe will treat Beijing as an explicit threat.