Mao Zedong once said: “The East Wind prevails over the West Wind.”

We are witnessing the reconfiguration of existing international institutions and global course that draws from projects like [the ‘Belt and Road Initiative’] BRI. China […] serves as an alternative to the traditional Western-institution-led development.”[1]

The year 2016 brought two major cuts to the European foreign and economic policy. With the United Kingdom leaving the European Union after the so-called Brexit decision and triumphant U.S.-President Donald J. Trump proclaiming his ‘America First‘ policy, the Western world has experienced a clear shift towards a ‘post-multilateral’ approach. In these difficult times for the traditional trans-Atlantic partnership another great power is rolling out a new map of the world regarding diplomacy, development and trade: China.

Representing a new type of institutionalized international relations of a size never seen before, Beijing’s ‘Belt and Road Initiative’ (BRI), officially known as ‘The Silk Road Economic Belt and the 21st-century Maritime Silk Road‘, is proposing the revival of the old land and maritime routes of the Silk Road. In this context, China has established a cooperation platform with sixteen Central and Eastern European Countries (CEEC) which is called ’16+1’. As the European Union is still negotiating a membership with several CEEC countries and at the same time treating the People’s Republic of China with silk gloves, this newly established format poses both chances and challenges regarding the regional cooperation in Europe.

The following paper addresses the question whether the ’16+1′ cooperation framework can be more advantageous or disadvantageous for an inner-European cohesion and if the previous work has changed the perspective on Europe towards global South-South relations.

In the beginning, the China-CEEC framework will be analyzed by both regional and international implications of global cooperation. In addition, a short overview of the development of ’16+1′ is to be given. Afterwards, the Chinese as well as the European interest regarding the cooperation format will be discussed. After taking the positions of other regional powers into consideration, the work will finally give an outlook into the future of the Chinese involvement in Central and Eastern Europe.

Regional and International Implications of the ’16+1′ Cooperation

Through the project of the ‘Belt and Road Initiative’ China is overcoming its own old foreign policy with ‘no strings attached’. With respect to the Chinese President’s Big Dream, Beijing now favours a new global strategy: It tries to gain a bigger role in the global economy and the strategic development of infrastructure and investment on the basis of free trade. The country is looking forward to enlarge its own production capacity by forming new corridors for trade cooperation which are meant to transport national goods and services. The overall project can be seen as a key towards an equal globalization policy which is to promote regionalization and interregional balance.

For its realization China is in need of working together both bilaterally and multilaterally with international organizations as well as regional initiatives. The BRI is generally carried out by a net of existing networks like the Asia-Europe Meeting or the International Monetary Fund and works through political communication and exchange. While the system is working with a base of coordination principles it has to emphasize a mutual understanding of different international interests and policies.[2]

The ’16+1′ cooperation is strategically meant for China to practice its periphery diplomacy and to overcome the existing geographic distance.[3] Liu Zuokui presents in his work four ways in how the project differs from earlier approaches in international relations: The framework represents an inclusive cooperation in which also third party countries or organizations can join; Belarus, Greece and Turkey have already used this option. The final target is a ‘win-win’ situation where all included actors should benefit to the same extent. Cooperation isn’t seen as a ‘zero-sum game’ but should concentrate on the main interests of all partners and also include concerns of others, e.g. the European Commission. In the end, China-CEEC collaboration is developed through a common consultative platform which also includes the famous Chinese ‘people-to-people cooperation’ focusing on a mutual cultural understanding.[4]

A first approach of the People’s Republic of China to cooperate with Eastern Europe was planned in 1968 by forming an alliance together with Albania, Yugoslavia and Romania. Although the socialist states were in exchange during the Cold War, the plans never got realized. After the fall of the Iron Curtain in 1989, the ways towards an opening to the West differed greatly between the former East Bloc countries.[5]

The ’16+1′ partnership formally began with the visit of Chinese Prime Minister Wen Jiaobao to Poland in 2011 who requested annual summits with sixteen Central and  Eastern European Countries (CEEC). This group consists out of member states of the European Union and the North Atlantic Treaty Organization (NATO) as well as non-members of these two organizations: Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Macedonia, Montenegro, Poland, Romania, Serbia, Slovenia and Slovakia. Other countries of the region aren’t included because of different political reasons, so is Beijing for example not recognizing the independence of Kosovo.[6] The artificial assembly of states out of political rather than geographical or cultural considerations makes it “a region elaborated by China”[7].

The European branches of the ‘Belt and Road Initiative‘ are geographically depending on two main land corridors: An Eurasian bridge in the north is going alongside several train lines through Russia over the Baltics to Poland while a southern channel is linking East Asia with the Middle East and countries in the Balkans. Two shipping tracks are at the same time connecting the Suez Canal with Greece as well as ports in the eastern and western Black Sea.^[8] The overall China-CEEC cooperation stretches over different thematic fields like culture, health, science, technology, agriculture, finance or economics for which 15 cooperational institutions with seats in the different CEEC countries have been created so far.[9]

China’s Charm Offensive in Europe

In the last years, China has called the relations with CEEC countries as diplomatic ‘highlights’ and has repeatedly underlined their geostrategic significance regarding the ‘Belt and Road Initiative’ as a whole. With this, the region which is often referred to as the European periphery got new self-confidence regarding its economic attractiveness and geopolitical importance. Still, the states now have to deal with their own challenges and have to balance between a possible Chinese appropriation and a European outsider position. Until the beginning of 2017, seven Central and Eastern European states have signed so called ‘memorandums of understanding’ to further deepen their cooperation with China.[10]

The pursued Chinese investment strategy and so called “Renminbi diplomacy”[11] is orientated as market-seeking: China still depends largely on the import of foreign technology and innovations and lags behind its East Asian neighbours in several economic fields.[12]

In contrast to that, the CEEC states are consisting out of quite developed capitalist markets that can deliver low-cost high-skill labour together with simultaneously advanced technologies for China’s excess production capacity. The still large gaps in Eastern European transportation and energy infrastructure provide the partner in the Far East a great potential for an approach regarding current development and future investment possibilities in the region following the principle: “If one wants to develop, one should build the roads first.“[13].[14]

Another advantage is the broad membership of CEEC countries in the Common European Market as well as the World Trade Organization (WTO) or NATO which can help China to gain political influence and learn about regulations in these institutions without being included itself. Furthermore, this cooperation can provide geographical access to other trade formats like the Commonwealth of Independent States (CIS), the Mediterranean Sea or the European Free Trade Agreement (EFTA).[15]

Such an impact has already become apparent this year when a broad coalition among the EU states voted against a greater control of investing by third countries – where China was explicitly mentioned.[16]

Several arrangements have been made in order to manage the financial handling of the BRI projects, the Silk Road Fund and the Asian Infrastructure Bank only being two prominent examples. For the ’16+1′ cooperation an individual China-CEEC financial corporation is to be established and the exchange with European and International development funds and banks to be deepened.[17]

“By investing in countries rich in natural resources, China also plans to expand its energy security and ensure the present and future demand for commodities. China is investing in the hydropower sector in Albania, Montenegro and Bosnia and Herzegovina, as well as the wind energy sector in Macedonia, Serbia and Croatia.”[18]

As seen, most of the financing is currently flowing to countries in the Western Balkans as they aren’t EU members and therefore also not bound to the strict investing regulations. Although the cooperation is working there the China’s investment regime has in other cases admittedly caused controversial cases in some European states and is questioning the long-term principle of ‘win-win’ in general: Several Chinese companies were accused of undermining European salary standards as well as disrespecting local law. The huge amount of Chinese workers brought to other developing countries through large cooperational projects is worrying national labour markets and creating several concerns which are being further addressed in the next chapter.[19]

A Divided European Interest

As of now, the EU and China are trading over 1 Billion € per day. Still, the European trade deficit with China has reached a record of 180 Billion € in 2015. While the European Union mainly imports machinery, equipment, clothing, furniture, and toys from China, its exports include cars and aircrafts, machinery as well as chemicals.

With the little inner-European investment regime, Chinese businesses could bring a much needed input for growth and development to some of the stagnating Eastern European national economies. Especially host countries of the last ’16+1′ summits like Romania and Serbia have experienced a larger recognition by foreign investors from East Asia. This creates however a competition for the summit organization itself with states that cooperate  more closely with China and stronger represent its political positions outwardly being in clear favour. This could be observed this year as Viktor Orbán’s Hungary was preferred to the Czech Republic.[20]

Some of the common development projects that are either realized or under construction include for example the building of power plants in Bosnia-Herzegovina and Serbia as well as infrastructure projects for a highway in the former Yugoslav Republic of Macedonia. One flagship project of ’16+1′ is the realization of a high-speed railway between Budapest and Belgrade which is however not yet implemented. It therefore doesn’t stand alone but together with other projects that have already been agreed on; these mainly stagnate due to problems with contractors and generally hasty investments by the Chinese side with regulatory issues still unsolved. These unclear legal conditions are further provoking infringement proceedings from the European Commission.[21]

Mistrust of the European Union in the Chinese agitation had been high especially in the beginning with some diplomats even warning about a “new Berlin Wall”[22].

Together with some of it’s CEEC members they are mainly concerned with three critical issues regarding the cooperation with China:[23]

Chinese investment is distributed on a highly unequal level. Until 2014, six countries made up 95% of the financial spending inside of ’16+1′: The four Visegrád states of the Czech Republic, Hungary, Poland and Slovakia as well as Bulgaria and Romania. From those, Hungary has yet received the highest amount. Still, the expectations in the region haven’t been met in the first years, even though the general numbers have risen from 410 Million US$ in 2009 to nearly 1.7 Billion US$ in 2014.[24] Regarding another concrete example, the general number of exchanged freight trains has increased more than tenfold between 2013 and 2015 but the amount of them going in China’s direction is still as twice as high as on the different route.[25]

Several CEEC states have caught up to the standard development status inside the European Union and will thus get less support out of structural funds in the next years although they are still highly dependent on foreign investment. If the European Union will be struck with another crisis in the future, member states are likely to begin competing with each other for continuing Chinese attention.[26]

As Beijing is selectively cooperating with special CEEC states, this can affect the positions amongst EU members and the work of its institutions. China could therefore profit from a ‘Divide and Rule‘ policy strengthening its own position on the continent whilst EU-China relations in general would be suffering due to easy economic manipulation. Thus, the EU would have to fear loosing its attractiveness towards potential accession candidates in the Balkans.

The remaining national foreign policies within Europe are hindering collective negotiations and are simultaneously promoting competition amongst the single countries. It is still unclear how the EU could possibly transform its member states’ bilateral investment treaties in multilateral agreements for the union as a whole. To work against these difficulties and build a coherent framework a structuring process based on the three levels of the European Union, its sub-regional structures as well as the single states has been initiated.[27]

China is still not obeying international trade rules as it is flooding global markets with its cheap mass products and services. Owing to this fact, Beijing also menaces the European industrial production by not sticking to EU regulations. Thus, it could not attain an official WTO market economy status from the European Union and still has to fear dumping penalties. At the same time, China is still blocking EU member states from a complete access to its own market.[28]

On the other hand, Europe could benefit geopolitically from an improved cooperation with China in the field of security. Beijing is trying to form a security mechanism in Asia through different platforms such as “the Conference on Interaction and Confidence-Building Measures in Asia (CICA), the Shanghai Cooperation Organization (SCO) and the ASEAN Regional Forum (ARF).”[29]

The Chinese project could be included in the European policy on connectivity and follows sub-regional programs of the EU. It could therefore build bridges to little explored energy regions especially in Central Asian countries like gas-rich Turkmenistan which have the EU already as their second biggest trading partner after China. The European Union could in some years play a crucial role in the region as it is on its way towards WTO admission but is still unequally dominated by Russian military power and Chinese energy trade dependence.[30]

Backyard of the Big Players

As both Central and Eastern Europe as well as Central Asia have for a long time been dominated by the great powers of the wider region and are mostly still young states themselves, the new Chinese agitation in the core of their ‘backyards’ is attracting the attention of different regional key stakeholders.[31]

The land part of the ‘Belt and Road Initiative’ is dependent on Russian approval as the old Silk Road corridors are running through its own territory or at least through former Soviet republics that are still perceived by Moscow inside its sphere of influence.

With the de facto end of Communism in both states, the foreign relations have improved: “China has become a vital and strategic partner for Russia in the so-called anti-hegemonic and multipolar world approach. Russia and China have been able, so far, to arrive at some division of labour in Central Asia.”[32]

Nevertheless, China is for the most part trying to skip the necessary coordination with its large Northern neighbour by avoiding risky subjects and regions such as the subject of Central Asian terrorism prevention and the Crimean annexation: Whilst Ukraine is not a part of the Central and Eastern European countries in the ’16+1′ format, Beijing has started to strengthen cooperation with Kyiv in the last years. Thus, it wants to build up a trade route through Azerbaijan, Georgia and the Black Sea which would considerably shorten the maritime transit time and entirely bypass Russian territory.[33]

Although Germany is maintaining a good and tight economic relationship with China the government in Berlin is doubting China’s development motives concerned about the weakening cohesion within the European Union. In 2014, it therefore started to implement the ‘Berlin process’ to closer connect the Western Balkan countries with the EU.

Poland is in a divided position regarding ’16+1′: Chinese investment is on the one hand enhancing the domestic financial regime and consolidating the CEEC economy as a whole but on the other hand more or less blocking Polish foreign policy interests in the wider region and the Visegrád format as some of the projects can be seen as parallel structures or even rivalling development towards the Three Seas Initiative connecting Baltic, Adriatic and Black Sea with infrastructure. While Warsaw’s focus is lying on an internal route improvement and network consolidation in order to overcome the old infrastructural East-West dependence from Soviet times, Beijing is exactly trying to build new economic paths even more further to the East.

Despite experiencing a fundamental change in its foreign policy, the United States of America still remain interested in the North Atlantic space and a coherent and stable European security regime – especially as 12 out of the 16 CEEC countries are also NATO members. With respect to the U.S. and China already defining the new global politics of the 21st century, the Chinese initiative in Europe has provoked concerns in Washington regarding the beforehand pragmatic approach to Beijing.[34]

Future Perspectives on the China-CEEC Cooperation

With the proclamation of a new silk road running around the globe by land and sea, China has raised both high expectations and deep concerns. Whilst the project was in the first years fitted solely for Beijing’s own needs it had to be tailored to the wishes of the new partners as it changed from a broad concept to a detailed plan. The promotion of a ‘new type of great power relations’ has therefore easily become overburdened and lost some of its former objectives out of sight. As China until now has not opened up about all the motivations behind ’16+1′ the picture stays mixed and the broad visions remain partly blurred.[35] Even answers to the question whether the mutual mistrust has yet been overcome or not can differ.[36]

Even though Brussels is recognizing the positive general aims of China’s strategies in Europe, there is still a conflict between compliance to values and the desire for increased investment. EU Lawmakers still tend to be cautious about the actual gains from the proposed ‘win-win cooperation’ regarding trade regulations and hidden agendas of Chinese financing.

With Beijing’s move to open up the BRI project to countries like Australia that aren’t traditionally connected to the ancient silk road it managed to calm questions about the selective choice of single European countries to join on the one hand but on the other hand weakened the geographical exclusiveness of the initiative and thus its public value in general.[37]

From 2012 to 2014 the common ’16+1′ trade decreased and later on dropped heavily in 2015, mainly because of implemented Chinese economic and structural reforms and increasingly competitive export markets. Furthermore, the cooperation has been challenged by higher security risks regarding the refugee crisis, tensions with Moscow around the Ukraine crisis as well as terrorism. Synergies couldn’t effectively been found to a still existing lack of mutual understanding in policy motives of the partners and a terminology strongly influenced by different interpretation of both sides.[38] Especially the latter become clear during the Riga Summit which in the end formed the two main ideas of ‘transparency and reciprocity‘ and could claim the creation of a people-to-people cooperation space model. If the future cooperation wants to firmly stand on both legs and to avoid further miscommunication and stagnation this much neglected academic and intellectual contact of Central and Eastern Europeans with Chinese citizens will be essential.

[1] Burjanadze, Anna: China and the EU within the framework of «16+1»: Obstacles and Prospects. In: Latvian Institute for International Affairs, 07.08.2017.

[2] See: Vangeli, Anastas: China’s Engagement with the Sixteen Countries of Central, East and Southeast Europe under the Belt and Road Initiative. In: China & World Economy (25/5), pp. 102 seq.

[3] See: Zeng, Jinghan: Does Europe matter? The Role of Europe in Chinese Narratives of ‘One Belt One Road’ and ‘New Type of Great Power Relations’. In: Journal of Common Market Studies (55/5). p. 1170.

[4] See: Zuokui, Liu: China-CEEC Cooperation: China’s Building of a New Type of International Relations. In: Croatian International Relations Review XXIII (78), 2017. pp. 21 seq.

[5] See: Musabelliu, Marsela: China’s Belt and Road Initiative Extension to Central and Eastern European Countries – Sixteen Nations, Five Summits, Many Challenges. In: Croatian International Relations Review XXIII (78), 2017, p. 62.

[6] See: Andžāns, Māris; Berziņa-Čerenkova, Una Aleksandra: 16+1 and China in Latvian Foreign Policy: Between Values and Interests. In: Sprūds, Andris.; et. al. (Ed.): Latvian Foreign and Security Policy Yearbook 2017, p. 164.

[7] Andžāns, Māris: Riga 2016 International Forum of China and Central and Eastern European Countries: Conclusions, Considerations, Recommendations and Introduction to the Afterthoughts. In: Andžāns, Māris (Ed.): Afterthoughts: Riga 2016 International Forum of China and Central and Eastern European Countries. Latvian Institute for International Affairs 2016. p. 15.

[8] See: Zuokui, Liu: Fixing the Status Quo of China and CEE Cooperation. In: Sprūds, Andris; Potjomkina, Diāna (Eds.): Coping with Complexity in the Euro-Atlantic Community and Beyond. The Rīga Conference Papers 2016. p. 249 and Vangeli, ibid., pp. 104 seq.

[9] See: Andžāns, ibid., p. 14. and Zuokui: Status Quo. pp. 250 seq.

[10] See: Sprūds, Andris: Towards a Balanced Synergy of Visions and Interests; Latvia’s Perspective in 16+1 and Belt and Road Initiative. In: Croatian International Relations Review XXIII (78), 2017, p. 41. and Vangelis, ibid., pp. 102 seq. and p. 119.

[11] Kowalski, Bartosz: China’s foreign policy towards Central and Eastern Europe: The “16+1” format in the South–South cooperation perspective. Cases of the Czech Republic and Hungary. In: Cambridge Journal of Eurasian Studies, 2017, 1: #7R65ZH. p. 3.

[12] See: Burjanadze, ibid.

[13] Vangeli, ibid., p. 118.

[14] See: Ibid., p. 105.

[15] See: Burjanadze, ibid., and Vangeli, ibid., p. 105.

[16] See: Cerulus, Laurens; Hanke, Jacob: Enter the Dragon. In: POLITICO Europe, 10.09.2017.

[17] See: Zuokui: Status Quo. pp. 254 seq.

[18] Burjanadze, ibid.

[19] See: Šteinbuka, Inna; et al.: Cooperation Formats of China and Europe: Synergies and Divergences. In: Baltic Journal of European Studies 7/1 (22), pp. 104 seq.

[20] See: Ibid., p. 99, p. 106 and p. 110.

[21] See: Ibid., pp. 110 seq.

[22] Jing, Long: The Transition of EU’s attitude towards “16+1”. In: Andžāns, Māris (Ed.): Afterthoughts: Riga 2016 International Forum of China and Central and Eastern European Countries. Latvian Institute for International Affairs 2016. p. 25.

[23] See: Burjanadze, ibid., Musabelliu, ibid., p. 70. and Jing, ibid., pp. 25 seq.

[24] See: Stanzel, Angela (Ed.): China’s Investment in Influence: The Future of 16+1 Cooperation. In: ECFR China Analysis, December 2016. p. 8. and Vangeli, ibid., p. 115.

[25] See: Makocki, Michal: One-Way Train from China to Central Europe. In: Andžāns, Māris (Ed.): Afterthoughts: Riga 2016 International Forum of China and Central and Eastern European Countries. Latvian Institute for International Affairs 2016. pp. 43 seq.

[26] See: Vangeli, ibid., p. 106 and Burjanadze, ibid.

[27] See: Zeng, ibid., p. 1171. and Jing, ibid., p. 26.

[28] See: Andžāns, ibid., p. 17.

[29] Burjanadze, ibid.

[30] See: Burjanadze, ibid.

[31] See: Zuokui: New Type. p. 31. and Zuokui: Status Quo. p. 257.

[32] Sprūds, ibid., p. 49.

[33] See: Burjadnaze, ibid.

[34] See: Musabelliu, ibid., pp. 70 seq.

[35] See: Zeng, ibid., p. 1173 and Sprūds, ibid., pp. 47 seq.

[36] See: Andžāns, ibid., p. 18.

[37] See: Zeng, ibid., p. 1172.

[38] See: Zuokui: New Type. pp. 29 seq.