Motion: “China’s activities in Central and Eastern Europe are motivated primarily by economic goals”
FOR the motion:
China Studies Fellow, RISAP
China established the 16+1 (now 17+1, including Greece) platform seven years ago, with the aim of deepening cooperation with Eastern Europe. The format was intended to stimulate economic exchanges, increase trade flows and make outward direct investments smoother, while cultivating friendship among its partners. In doing so, China had naively assumed that the shared communist past with the majority of its European partners will be a facilitator in this regard and, consequently, a wave of ambitious projects will emerge.
However, the newly created platform is so far modest in its achievements. Apart from the Memorandums of Understanding signed on different occasions, initiatives for cooperation on the part of the 16 “beneficiaries” were scarce or non-existent. At the same time, Brussels grew more and more concerned that China may try to divide the European Union by reaching out to the 16 European countries as a distinct group.
These circumstances serve to many as an argument that China’s interest in the region is primarily political. However, as listed in the points below, there are multiple different reasons behind the lack of economic achievements of China in the CEE region. Thus, in spite of all criticism, I believe that China’s interest in Eastern Europe is purely economic for the following reasons:
1. A strong economy is crucial for keeping Chinese society well-functioning. The authoritarian regime remains unchallenged as long as the economy performs as promised or beyond. Since globalization has scaled up the interdependence between states, China, like any other country, struggled to create solid economic ties with strategic partners. Western Europe previously received almost all the attention and once its connections with China solidified, China’s interests organically expanded to the East, to the emerging markets of the CEE region
2. The developed economies and the emerging markets of the European Union can teach China important and distinct lessons. While the West can offer expertise and know-how in strategic fields, the East is the perfect playground to test all that knowledge. This explains the two-tier approach that China employs in its relationship with the EU. In fact, China has replicated its domestic model, where it customizes its strategies according to the level of development and the specific needs of each province.
3. Brussels’ concerns regarding Beijing’s true intentions are founded on the fact that China was the first non-EU country to have reached out to a part of the EU member countries only, excluding the founding members. Such concerns are not supported, though, by the political realities of the past years. The twelve EU member states that partake in the 17+1 platform have not produced any common position on China in Brussels. Although the case of Hungary is used by some as an example of a CEE country that “lobbies” for China within the EU, one has to stretch its imagination to link Victor Orban’s decisions to the 16+1 format.
4. Unfortunately, the fear of China’s political interests in the region drew attention away from exploring potential economic gains in the CEE 17. Despite repeatedly dismissing such allegations, China was forced to consider political implications in its talks with the EU. Consequently, a political debate animated by fear, caution and suspicions was soon ignited in Brussels. This has discouraged China from being “too active” in the region and hindered possible economic achievements.
5. As in a vicious circle, the failure to bring significant economic results to any of the partners reinforced suspicions that China’s real interest in the region is political. The passivity of the 16 European members in refuting this hypothesis has reinforced it. But China’s faulty reputation within the EU did not start with the CEE 17+1 format. Its authoritarian regime, the lack of a true market economy and the human rights infringements on various occasions were responsible for most of China’s bad image abroad, in spite of the country’s efforts to ‘open up’.
6. To address the issue of “divide and rule” that is often cited as China’s motivation behind creating the 17+1 format, I believe that the reason why China has addressed the 17 countries together and not separately is purely logistic. The recent history of the 17 East European countries suggests that their level of development, as well as their economic needs, are similar. So, instead of negotiating separately with each one of them, China has decided that a wiser approach is to create a common forum. Moreover, the 17 countries taken separately would not have created the same interest in China.
To conclude, I think it is wrong to analyze the 17+1 initiative exclusively through the political lens, because there are no solid examples of pro-China intervention from the East and also, because it is hard to imagine what could China gain from destabilizing the EU, one of its most important economic partners. Therefore I believe China’s involvement with the CEE 17+1 is motivated by economic interests.
Furthermore, a common strategy on trade with China would be highly useful to all 17 CEE countries, since none of them can produce enough to meet Chinese demand. The reasons why this has not happened yet range from the lack of vision and interest of the East European countries, the vagueness of China’s discourse, and the EU’s reluctance towards the initiative, which has discouraged both China and the 17 states from being more involved.
With Greece’s accession to the 16+1 format, the initiative received a new dose of enthusiasm, lifting up motivation and increasing expectations within the partner countries and beyond. However, even if the CEE 17+1 was indeed to achieve significant economic gains, I believe suspicion regarding China’s ‘real’ interests in the region will continue to exist.
AGAINST the motion:
RICHARD Q. TurcSÁNYI
Program Director, CEIAS
As of June 2019, more than seven years since the official beginning of the 16+1 platform of cooperation between China and Central and Eastern Europe (CEE), the economic interactions between the two sides have increased only mildly and are behind the initial expectations and promises. The CEE countries host only marginal levels of Chinese FDI, both from their own perspectives or from the perspective of Chinese FDI in Europe, and the trade has still not reached the 100 billion USD mark set as a goal by Wen Jiabao to be reached by 2015. Moreover, most of the trade increases were on the side of the Chinese exports to the CEE, further deteriorating the CEE countries’ trade balance with China.
Keeping these numbers in mind, there are multiple points of evidence that Chinese goals in the CEE region have not been primarily economic:
1. The economic statistics notwithstanding, Chinese officials, media and most scholars have asserted that China-CEE relations have been successful. This may signal that no major adjustments should be expected when it comes to the economic performance of China-CEE relations.
2. China and most of the CEE countries are not economically complementary. Generally speaking, China invests either in highly developed countries to get access to technologies and brands, or in developing countries where it is interested in raw materials or construction of infrastructure projects in the conditions of low regulatory burdens. The CEE countries are structurally somewhere in between the developed and developing countries, offering the location for sophisticated manufacturing or service provisions for Europe primarily. Chinese Mainland companies – unlike Japanese, Korean or Taiwanese – are currently not too interested in this business model of the CEE countries. In other words, CEE is not too crucial for China economically, and there is little prospect it would change in the foreseeable future.
3. One may say that China and the CEE countries were not familiar with each other so they might have exaggerated the economic potential of each other. Even if that was the truth, seven years into the dynamic initiative, the reality should have been recognized by both sides. Therefore, since China-CEE relations have not seen any significantly decreasing levels of attention so far – at least on China’s side – one may suggest that China is not too disappointed with the lack of economic results.
4. Another point that is often raised is that we need to be patient to see the economic results of China-CEE relations. This point is, however, losing its validity with time going and also it ignores the analysis of the economic structural relationship offered briefly in the previous argument. There are also no signs that much effort would be paid to address the issue of lack of economic results, neither as part of the diplomatic process nor when looking at substantial steps of China.
5. As an illustrative example, the trade in agriculture products might be used. Although Chinese officials regularly mention this as one option for increasing CEE exports to China, the process of granting market access for the CEE food products is extremely lengthy and cumbersome, suggesting there is no real will in China to fix the issue. Moreover, even if the Chinese market is to open to the CEE agriculture products, it would remain mainly a symbolic feature as the CEE economies are far from being major agriculture exporters.
6. One may be surprised to see the amount of non-economic activities organized as part of the China-CEE diplomatic process. Although political and people-to-people activities are a standard part of many diplomatic initiatives, when compared to the number of direct attempts to address the economic interactions, it seems the goal of China-CEE relations is actually to organize the exchanges for their own sake rather than to drive the economic interactions. There is little to no discussion about the substantial economic aspects of relations and suggestions on how to address the shortcoming – aside from more exchanges and events like fairs and conferences.
7. It is widely accepted that Chinese foreign policy has seen some significant changes in recent years. First, China has mostly abandoned the ‘low profile’ dictated by Deng Xiaoping and started to act more pro-actively or ‘assertively’. Second, as part of this shift, the primary foreign policy goals became more political rather than economic. In the words of Yan Xuetong, while economic profits were the ‘achievements’ previously, it is now political relations with other countries which count as success. The establishment of the 16+1 platform to develop political ties with the CEE countries fits well within this broader direction within Chinese foreign policy.
To conclude, economic and non-economic goals mostly come together for China in domestic and international politics and the CEE region is no different. At the same time, politics is usually the first consideration for China, and it is so for its policy towards the CEE region as well. Even if China truly believed seven years ago that there was enormous economic potential in CEE, by now, it must have got a more accurate picture. Yet, it continues to invest diplomatic effort in the initiative.
This does not mean that China does not have economic goals – it does, but these are subordinate to the political ones. Meanwhile, to claim that China follows political goals in the CEE region is not to say that China wants to ‘divide and rule’ Europe as some argue.
The CEE region is still a region with the least Chinese presence globally with some complicated legacy of different political trajectories taken after 1989 by the two sides. It is also a region consisting of 16 (and after Greece’s accession 17) countries and presents a relevant voting bloc within European and even global politics. Understandably, China wants to improve its standing here and build stable and productive relations with these countries. The political potential of the CEE region is more important to China that the limited economic potential of these countries.