Central and Eastern Europe Is Not in Bed With China

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Central and Eastern Europe Is Not in Bed With China

Western analysts often parrot Chinese talking points about the strength of China’s presence in the region. The truth is far less rosy for Beijing.

Central and Eastern Europe Is Not in Bed With China

Chinese Premier Li Keqiang, left and Serbian Prime Minister Aleksandar Vucic arrive for a group photo during China – Central and Eastern Europe meeting of heads of government in Belgrade, Serbia, Dec. 16, 2014.

Credit: AP Photo/Darko Vojinovic

If you ask three experts from the United States, China, and Central and Eastern Europe (CEE) about China-CEE relations, you will receive three different answers. While the Chinese might say that relations are very good and the American might say that the Central and Eastern Europe region is in bed with China, the expert based in the CEE region will probably say that China-CEE relations are largely a disappointment.

Writing about China-CEE relations, former U.S. Assistant Secretary of State A. Wess Mitchell argued that the Central and Eastern Europe region is very dependent on China, which has influence over the governments in the region. This view is frequently heard in Western capitals, but far from the truth on the ground.

First of all, Central and Eastern Europe is not a monolith, but a disparate group of over a dozen countries with different backgrounds. Treating it as a bloc is incorrect. China made this mistake eight years ago when it created the then-16+1 mechanism with 16 CEE countries (when referring to the CEE region, I will only refer to these countries, excluding Moldova, Ukraine, and Belarus). The region was perceived by China as favorable terrain to export its technology, know-how, money, loans, and workforce in order to fill the investment void in the region and win influence. Back then, China didn’t think about the peculiarities of each country and definitely didn’t take into account the Russian factor.

Among the CEE countries, some — like Romania, Poland, Lithuania, Latvia, or Estonia — are staunch U.S. allies; some, like Bulgaria or Croatia, are more flexible; and there are pro-China governments in Serbia or Hungary. One important difference is that Baltic countries are very passionate about human rights, while others, like Serbia or Hungary, are less interested in this topic.

The Czech Republic, Slovakia, Lithuania, Latvia, and Estonia are among the few countries around the world that have a parliamentary support group for Tibet. Recently, not only did 50 members of parliament and 100 public figures from Lithuania call on the country’s president to support Taiwan’s involvement in World Health Organization activities, bu the Lithuanian foreign minister even asked WHO Director General Tedros Adhanom Ghebreyesus to invite Taiwan as an observer.

When the United States or the EU fear China’s influence in the CEE, it is because they assume “small,” “weak” countries will no longer have the courage to oppose or criticize a great power. Yet, a “small” country — and even a city like Prague — proved the contrary. This is in fact possible because, apart from this blunder of treating all CEE countries as a bloc, there is a bigger sophism: the CEE region’s dependency on China.

If there are three countries in the region that may look more friendly toward China — the Czech Republic, Hungary, and Serbia — each one has very different stories behind their ties to China and none is, in fact, dependent on China. Serbia may be the only CEE country it is fair to accuse of being “in bed with China.” In Hungary’s case, part of the rhetorical affiliation to China can be explained by Viktor Orbán’s attempts to gain more leverage inside the European Union. In 2018, he warned that if the EU doesn’t offer Hungary more funds for infrastructure, his government will turn to China. But in concrete terms, Hungary has attracted less than $1 billion in Chinese investments since 2012, when the 16+1 mechanism was inaugurated.

The story of the Czech Republic is even more interesting. Over the past three decades, the Czech Republic has succeeded in becoming a strong democracy and respect for human rights still runs deep. While the Czech president, Miloš Zeman, is a big friend of China, the Prague mayor is a fanatic supporter of Taiwan, and the Parliament has a Group for Tibet. The former president of the Senate, Jaroslav Kubera, who unfortunately died from a heart attack in January, planned to visit Taiwan this year; his successor recently announced that he intends to visit Taiwan in August. Does anybody think a leader of the U.S. Congress, like Nancy Pelosi or Mitch McConnell, would have the boldness to visit Taiwan these days?

Even Zeman, who could be accused of being “in bed with China,” has his limits. Soon after receiving a letter from the Chinese embassy that threatened retaliation against Czech companies in China, because of Kubera’s planned visit to Taiwan, Zeman decided to publicly decline the invitation to participate in the 17+1 Summit that would take place in Beijing this year, arguing that China didn’t fulfill its investment promises (he later reconsidered his position).

And he was right about unfulfilled promises. Out of around $126 billion of Chinese investments in the European Union (excluding the U.K.) between 2000-2019, less than $10 billion were directed to the CEE region, of which $5.5 billion went to Poland, Hungary, and the Czech Republic alone. If Zeman was disappointed, imagine how other CEE countries feel. During the same period, Germany received around $25 billion, the U.K. $57 billion and the U.S. $149.9 billion of Chinese investments.

Now, let’s think again: who is in bed with China?

Despite this reality, the 17+1 mechanism became the European Union’s boogeyman and nurtured fallacies regarding China-CEE relations. If Chinese investment trends in the CEE over the past decade continue, it would take the region more than 100 years to be as economically interconnected with China as Western Europe is today. After eight years of an “increased” Chinese presence in the CEE region, only four out of around 40 Chinese projects have been finished. In order to save face, in 2019 China decided to add Greece to the 16+1 mechanism, transforming it into the 17+1, so it can now boast more successful projects like the Port of Piraeus.

Romania is a good illustration of the general situation in the CEE region. In 2013, if a Western observer had been asked about Romania-China relations, they probably would have said that Romania wants to be in bed with China. Back then, Romania hosted the 16+1 summit, proposed and signed almost a dozen projects with China, including the construction of nuclear, hydro, and thermal power plants, and signed a memorandum that committed the government to help Huawei increase its footprint in the country. The social-democratic prime minister was a close friend of China, who proclaimed Romania as China’s gateway to Europe and wanted to raise bilateral relations to the level of a strategic partnership. Seven years and six governments later, in 2020, none of these projects, which were supposed to amount to $10 billion, even got off the ground. The only reason some factories in Romania came under Chinese control over this period is because Chinese companies bought the Western companies that initially owned them: Pirelli, Smithfield, Takata, Nidera, and others.

Today, official statistics show that the stock of Chinese investments in Romania is less than $500 million. Romania wasn’t as vocal as Lithuania or the Czech Republic, but it was the first country that signed a memoranda of understanding (MoU) with the United States that targeted Huawei. Its steps were followed by Poland, which three months later signed a similar MoU with the U.S. Poland was even bolder in its actions targeting Huawei and China, as it arrested two suspected spies in Warsaw, one of them a Chinese employee of Huawei.

Coming back to Romania, it signed another MoU with the United States regarding civil nuclear cooperation. One of China’s biggest projects in the region was the construction of two nuclear reactors at the Cernavodă Nuclear Power Plant. While at the beginning the project was assigned to six Western companies, within three years all six gave up. The only company interested in investing and building the two reactors was China General Nuclear Power (CGN); it won the government’s procedure to select an investor in 2014 as the only participant. Six years later, due to endless negotiations, government instability, and external pressure, the Romanian government abandoned the deal with CGN, which is still in the running to build new reactors in the U.K., even though it was added to Washington’s entity list. Cernavodă’s fate remains uncertain — while there is an American company interested in modernizing an operating rector, there is no American or Western company interested in investing billions to build two new reactors.

Like Romania, many CEE countries don’t fall into the dependency stereotype. While the West looks toward the CEE superficially, rolling out the same ideas and stereotypes of Chinese division, dependency, and intrusion, the reality of China-CEE relations is dramatically different. The 17+1 flagship project, the Budapest-Belgrade railway, involving two of China’s closest allies, has been a big failure. After seven years, it still hasn’t been implemented — in fact, Hungary hasn’t even begun construction. If even the president who called Xi Jinping his “brother” couldn’t speed the implementation of a simple railway (which was initially supposed to be high-speed), it becomes clear that Western perceptions of China’s success in the CEE are overblown.

In another example, Montenegro became known worldwide as a victim of China’s “debt trap” diplomacy. It is one of only three countries in the CEE region and in Europe that didn’t have a highway. But Montenegro desperately wanted one. After many feasibility studies, Western banks weren’t interested in financing a project that just wasn’t profitable. China, without being interested in feasibility studies, stepped in, leading to a boom in Montenegro’s debt. But this didn’t translate into Chinese influence when it came to Montenegro’s strategic direction. Montenegro proved in 2017, when it joined NATO, that it,like most CEE countries, is more committed to Western values and principles. And it is not the only country that in a possible U.S.-China confrontation will take the American side. Most countries in the CEE region have proved they will stand with the United States because they are not dependent on China and because Russia is their main security fear. They will also prefer the EU, because Chinese investments will never have the impact of EU funds or the benefits of the single market.

But China failed to foresee this. And the EU and the United States still let their fear drive their analysis of the CEE region. While Central and Eastern Europe could have been a bedrock of the Belt and Road Initiative and the Chinese gate to Europe, because of unfulfilled Chinese investment promises, most countries accumulated a lot of disappointment and negative feelings. Thanks to a combination of the Russian factor, the attraction of EU funds, and the value of democracy and human rights for many voters, the fears of China’s influence in the CEE are vastly overblown.

But A. Wess Mitchell is right about one important thing: the United States and its Western allies need to step up their engagement and increase its investments in the region. Central and Eastern Europe lacks good infrastructure, which makes many foreign investors think twice. Because, as Chinese investments are also absent, CEE is still struggling to close the development gap with Western Europe and in many places citizens suffer from the lack of economic opportunities.

Before formulating a better U.S. strategy toward the CEE region, Washington first needs to adopt a fair and unbiased understanding of CEE realities and not endorseme Chinese propaganda that China-CEE relations are tremendous.

Andreea Brînză is the vice president of the Romanian Institute for the Study of the Asia-Pacific (RISAP), where she analyzes the geopolitics of China with a focus on the Belt and Road Initiative. You can follow her on Twitter @Andreebrin