Cooperation between China and the Central and East European (CEE) Countries

Cooperation between China and the Central and East European (CEE) Countries

The background of Cooperation between China and the Central and East European (CEE) countries – 16+1 – dates back to 1985. It is based on the ‘Trade and Cooperation Agreement’ signed under the umbrella of Strategic Partnership between the European Union (EU) and China.

This agreement covered issues related to security and international challenges such as global warming and universal economic governance apart from external affairs.

EU-China Association further strengthened through the creation of ‘Strategic and Comprehensive Partnership’ in 2003 which led towards the establishment of Cooperation between China and Central and Eastern European Countries (16+1) in 2012, as a multilateral platform to facilitate cooperation between China and CEE countries. Afterwards, the formation of ‘Strategic Agenda EU-China 2020’ in 2013 also deepened the ties between the parties (CDCEP 2016).

Led by the People’s Republic of China, the 16+1 format is an initiative aimed to fortify and expand cooperation with 11 EU member states and 5 Balkan countries including Albania, Bosnia and Herzegovina, Bulgaria, Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Macedonia, Montenegro, Poland, Romania, Serbia, Slovakia, and Slovenia.

The initiative intends to intensify cooperation in the fields of investments, infrastructure development, education, culture, science and technology. The framework of initiative, as outlined by China, defines three prospective prime areas for economic cooperation: infrastructure, high technologies, and green technologies (InvestmentandDevelopmentAgencyofLatvia 2016).

Dynamics of Cooperation between China & CEE Countries

China’s Belt and Road Initiative (BRI) has encompassed various land and maritime projects, marking the 16+1 cooperation another offshoot of the mega project. As China expands its regional and bilateral engagements throughout the world, 16+1 enables China to develop sound relations with European countries and ensure its presence in this part of the world. Starting officially in 2013, the project faced turbulence in the start but it has now managed to stabilize itself to a reasonable level.

As per statistics released by State Council of the People’s Republic of China, in 2017, the trade volume between China and the 16 Central and East European countries reached nearly $68 billion while growing at a pace of 15.9 percent over the last year (StateCouncilofthePeople’sRepublicofChina 2018).

Despite having fair trade volume in the region, the level of cooperation between China and CEE countries is not constant for all countries. For instance, only a few countries like Hungary and Poland have been able to benefit themselves from Chinese investments leaving other member countries disappointed. This has resulted in two scenarios; on one hand, member countries compete with each other for influencing Chinese investment while on the other hand, CEE countries have become more vigilant in cooperating with China.

Taking example of Poland, it is keen in expanding cooperation and exploring new horizons with China but at the same time remains cautious as both countries have failed once before in implementing a joint infrastructure project (Stanzel 2016).

The 16+1 cooperation also faces doubts and critics when it comes to economic aspects. The format of investments has alarmed most of the European countries. Being doubtful of the format, most of the European countries assume that China might use it as a tool to manipulate the cooperation in dividing and ruling the economies of the countries. For example, the investment deals concluded with China might not be in conformity to the European Union’s (EU) guidelines or could emasculate EU policies.

Ultimately, creating rift between the European institutions disrupting the gelled economic and socio-political environment of the region. Similarly, the cooperation also could tow a political side. A change in stance by some of the member European countries has been witnessed on China’s legal loss of South China Sea’s case. Greece and Hungary became unwilling to criticize Beijing bearing in mind the hefty Chinese investment they have received in the recent years (Stanzel 2016).

Chinese BRI-driven infrastructure developments could create monetary instability in EU failing to align with EU rules and regulations for building large-scale infrastructure, from transportation to energy and communications. The Bar-Boljare highway in Montenegro proves this stance as International Monetary Fund (IMF) warned that the project – funded by a Chinese loan – will increase the debt of small countries to unsustainable levels.

Another case of high-speed rail link between Belgrade in Serbia and Budapest in Hungary also showed same trends of non-alignment. European Commission’s formal investigation of the project in 2017 not only raised questions on the financial viability of the rail-link but also revealed that the 2.45 billion-euro ($2.8 billion) flagship BRI project did not comply with EU public procurement rules. Budapest had not released any notice for public tender procurement as its prerequisite for such mega projects. Afterwards, at the November 2017 Budapest 16+1 Summit, an official call for tender for the project was dispensed (Weidenfeld 2018).

China has also not yet been able to pull off its commitments related to the projects as in 2016. It vowed to disperse investment fund worth 10 billion EUR for infrastructure projects throughout Central and Eastern Europe. But its investments are largely concentrated in few countries like Hungary, Greece, Latvia, and others. So, China’s promises of increased economic cooperation are yet to materialize.

However, the political ties have bolstered vastly as the 16+1 format now embroils regular ministerial conferences such as the first China-CEEC Ministerial conference on energy cooperation, China-CEEC Transport Minister’s meetings that formed ‘Coordinating Secretariat on Maritime Issues’ (Poggetti 2017).

Conclusion

The true essence of 16+1 Cooperation is not yet being fulfilled after the announcement of BRI. As laid down in 2012, the objective of 16+1 Cooperation was to promote and intensify cooperation of all kinds between China and CEE countries, especially economic cooperation. However, after the launch of BRI, this cooperation mainly seems serving as an infrastructure linkage for China to support the expansion of BRI’s network.

The investments announced by China are also being placed in countries that are vital to Chinese national interest overseeing the dynamics of the cooperation. Critics say that China is investing on its own terms nullifying the norms of EU and they also say that European cohesion could be in grave danger because of this cooperation and directed Chinese investment.

China recognizes that there are worries about its cooperation with Central and Eastern European countries, but it says that it is not seeking to divide the continent and it gives assurances of China’s support for European integration and respect of the EU’s jurisdiction over trade, investment, government purchasing and other areas.

There are other factors in which the cooperation is proving fruitful and it is working on achieving common goals for common goods. One such example is of sustainable energy and the other is of climate change. This cooperation is working keenly on preserving the climate, calls for efforts to slow down the emission of carbon to save natural environment. Similarly, the issue of piracy is also being highlighted in different summits of the cooperation for safeguarding international trade.

Image Credit: China-CEEC Cooperation Official Website

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