Beijing seeks to buy more clout on the eastern edge of the EU

Two meetings this week in Eastern Europe suggest that China's influence is decreasing in the EU, in the wake of more than a year of growing scepticism about Beijing's policies. Meanwhile, the European Union is giving mixed signals to countries on its eastern fringes, and does not seem to have a clear policy. What are the alternatives?

Slovakia's President Zuzana Caputova, left, Poland's President Andrzej Duda, second left, Hungary's President Janos Ader and Czech Republic's President Milos Zeman, right, attend the Visegrad Group presidents two-day summit with the presidents of Hungary, Poland, Slovakia and Czech Republic marking 30 years of the Visegrad Group, an informal body of political and economic cooperation in the region, at the presidential residence in the Hel Peninsula, Poland, on Tuesday, Feb. 9, 2021. AP - Jakub Szymczuk

This week sees simultaneous meetings of two international political alliances crucial to nations on the eastern margins of the European Union. The Visegrad Group convenes in Poland, as does the "17 + 1" association involving China and Central and Eastern European Countries.

Both meetings are overshadowed by a looming geopolitical storm.

Central Europe is a community of shared fate in terms of geography, politics and economy as well as in terms of ideas & cultures,”

writes Polish President Andrzej Duda pic.twitter.com/uYfEXmkrgn

— Visegrad 24 🇨🇿🇭🇺🇵🇱🇸🇰 (@visegrad24) February 6, 2021

The Visegrad group, or v4, is formed by Poland, the Czech Republic, Slovakia and Hungary and "likes to see itself as an engine of growth," according to Alicja Bachulska, China analyst at the Warsaw-based Asia Research Center, and member of the MapInfluenCE project. The group's primary goal, to become a "platform of cooperation with the European Union," was fulfilled with the accession of the four member states to the continental bloc in 2004.

The four went through a difficult economic transition after the fall of communism, then saw an explosive growth of income levels which have since stagnated.

Today, "there's a frustration that joining the EU hasn't delivered more convergence" while the countries got stuck in a "middle income trap," says Richard Grieveson, Deputy Director of the Vienna Institute for International Economic Studies. The problem is "that they haven't got closer to German living standards over this 30-year period".

Belt and Road to riches? One giant and 17 dwarfs

Transcontinental initiatives by China brought renewed hope of rapid development. The Visegrad Four signed up to the "16+1" project (officially China-Central and Eastern European Countries, CCEEC), a loose cooperation between China and 16 Central Eastern European countries, which grew to "17+1," after Greece joined in April 2019, and merged into the larger, multibillion dollar Belt And Road Initiative.

Countries taking part in China's "17+1" project are indicated in blue for EU members and yellow for non-EU members. Poland, the Czech Republic, Slovakia and Hungary form the "Visegrad Group." © EUCNC

But this too, didn't work out as hoped.

"There was a big mismatch between the expectations of the region and what China was actually offering," says Bachulska. "China did not really understand that the 17 countries are very different," disregarding cultural and economic differences between the western Balkans, which are not part of the EU, the Baltic states, the Visegrad Group members. "China was not delivering."

Globally, Xi Jinping's increasingly assertive role started to antagonise international actors as well, leading to a harder line from the US and Brussels, fuelled by criticism of China's handling of Hong Kong and the treatment of Muslim Uyghurs in its western Xinjiang region and military sabre rattling in the South China Sea and along the borders of India. 

In this Friday, April 21, 2017, file photo, an airstrip, structures, and buildings on China's man-made Subi Reef in the Spratly chain of islands in the South China Sea are seen from a Philippine Air Force C-130 transport plane of the Philippine Air Force. AP - Bullit Marquez

The Trump administration whipped up anti-China rhetoric, creating an increasing rift between Beijing and Washington, accelerating a trade war and increasing a military stand-off in the South China Sea, while adding to Beijing's irritations by increasingly frequent overtures to Taiwan.

Systemic rival

Brussels too grew increasingly unhappy, calling China a "systemic rival" in its 2019 EU - China Strategic Outlook.

During a talk at the US policy think-tank Atlantic Council on 4 February, French President Emmanuel Macron reiterated the EU outlook that, while China should not be seen as a common enemy, Europe "also can't treat China fully as a partner, on par with the US, because China is a systemic rival when it comes to values and geopolitics in the Indo-Pacific region."

Wherever it is possible, cooperation - on security issues and climate change - must be encouraged, while challenges to Beijing on human rights questions should continue.

At the same time, the massive EU-China Comprehensive Investment Agreement (CAI) that was signed in December has Visegrad analysts puzzled. Many CCEEC countries were shocked by the sudden conclusion of the deal, after seven years of negotiations.

"many Eastern European countries feel that this was a very rushed process, and not very transparent, and that it basically reflects French and German interests in maintaining cooperation with China, and the status quo of the EU China relations," says Bachulska, adding that the spirit of the document is not in line with the EU's much more critical 2019 Strategic Outlook on China. "The provisions that are included in the CAI agreement, indicate that it is pretty much business as usual," she says. 

#CAI is not values-based. It was driven by specific (mostly German) business interests. CHN concessions on labor rights are vague & unenforceable. And the agreement deepens strategic dependence on China at a time when such dependence needs to be reduced. https://t.co/tBvcg2f0lO

— Mareike Ohlberg (@MareikeOhlberg) January 25, 2021

Yet Marcron's latest remarks do reflect the growing EU scepticism that spilled over into countries that tried to engage in China's Belt and Road project, some of which, like Poland, have also strong ties with the US and tend to listen more to Washington's anti-China sentiments.

The result is that the 17+1 meeting, opened by Xi Jinping on 9 February, coincided with the Visegrad event but was hardly reported by the non-Chinese press. Estonian press agency ERR confirmed that Estonia was represented by its foreign minister after it had "refused" to send a "higher ranking official," while Politico confirmed that Lithuania's president "snubbed" China as well by not showing up.

The website of China's state controlled TV station CGTN  (which in another sign of European China-scepticism lost its broadcast license in the UK on 4 February) says that the CCEEC "has no political strings attached," but remains vague on objectives and curiously publishes an opinion piece by former member of the European Parliament for the pro-Brexit party UKIP, Jonathan Arnott, that downplays accusations of China "dividing and ruling" the EU.

Serbian sidestep

For now, China is likely to concentrate on expanding cooperation - and gaining influence - with non-EU countries in the western Balkans, where Serbia now stands out as a major recipient of Chinese support, cooperating in the field of telecoms, with the local Huawei headquarters overlooking the Danube from a high-rise building. Tyre maker Linglong has invested almost €1 billion in its first European factory in the northern city of Zrenjanin, sponsoring Serbia’s top football league, now re-christened the “Linglong Superliga”.

The London-based Financial Times reports that, since 2012, Serbia has received more than eight billion euros of publicly announced Chinese funding and investment, “more than half of China’s stated investment in the region”.