China-Europe partnership benefits all
Editor’s note: In the run-up to the Seventh Leaders’ Meeting of China and Central and Eastern European Countries in Sofia, Bulgaria, eight scholars share their views with China Daily on the role of the 16+1 (16 CEE countries plus China) framework and Belt and Road Initiative, and regional geopolitics amid rising protectionism. Excerpts follow:
Central and Eastern European countries play a very important role in the Belt and Road Initiative and China’s trade with Europe. The inclusion of the “16+1 cooperation” mechanism in the Belt and Road Initiative as a framework of different mechanisms and arrangements between China and the 16 CEE countries is one of the most important and promising elements for the CEE countries.
The 16 CEE countries see China as a relevant market and a valuable source of investment, at least at the declarative level. The differences across the region are significant in many areas, including the economic development level, per capita income and institutional framework. And Brussels is concerned about reciprocity and access to the Chinese market for European companies.
Although the Bulgarian government has announced many times that it is motivated to support and actively participate in the initiative for cooperation between China and the CEE countries, and considers it an important platform for expanding bilateral ties as well as an effective addition to EU-China relations, Bulgarian political actions and positions have been quite different and inconsistent. But Bulgaria should be considered a bridge between Europe and Asia with a number of geopolitical and geo-economic advantages.
For Bulgaria, the Belt and Road Initiative is a strategic opportunity to be part of a newly emerging market. If Bulgaria really wants to be part of this project in the Balkan region, it has to compete with its neighbors, and make concerted efforts and negotiate with China by making clear its strategic interests and future plans.
Why is the 16+1 a new issue in the China-European Union relations?
In spite of China’s efforts to reassure the EU that the Belt and Road Initiative is not against European unity but instead offers new opportunities for all the participants, the initiative is still misunderstood and mistrusted. Even recent successes such as the fourth China-CEE Investment and Trade Expo, which saw the participation of 240 companies from 15 CEE (including 36 from Serbia, 30 from Poland and 28 from Romania), and the completion of the 16+1 Economic and Trade Demonstration Zone (both in Ningbo) could not change this attitude.
Some critics also see the Belt and Road Initiative as a “debt trap” and a way to bring less-developed partners in the position of “surrendering their sovereignty” to China.
We cannot accept such critiques if we are aware of these facts: we don’t live in colonial times, and even though China used the “chaogong system” during the imperial period, it never exploited its neighbors nor did it act as the aggressor.
China is not imposing its rules but trying to find the best suited cooperation alternatives according to its own and its trade partners’ development priorities.
Another feature of the present world order is related to the fact that in this stage of globalization, developed countries often invoke national interests and national security as arguments for their protectionist actions, because globalization seems to generate more positive effects for the emerging economies than for the developed ones.
The measures taken or announced by the United States and the EU against China in 2018 to counter the latter’s “misappropria- tion” of intellectual property through “joint venture requirements and other policies that force technology transfers” represent new breaking points in both US-China and EU-China relations.
China favors flexible institutional structures, following the experimental “Asian way”, and it believes they can bring benefits for all the participants, as all of them are invited to contribute to the agenda according to their priorities.
As part of the Belt and Road Initiative, the 16+1 cooperation platform is regarded by China as a framework that brings complementarities and synergies to the EU’s initiatives, and therefore contributes to the “balanced development throughout Europe”. If any countries still have doubts, they should discuss it directly with China.
Some Western critics project the Belt and Road Initiative and its projects as being “non-transparent”, “undermining EU regulations” and supporting “illiberal regimes in Eastern Europe”. As a result, there has been a move from rhetorical criticism to a “call for action” against Belt and Road projects, such as an appeal for stricter regulations and imposing tougher conditions on Chinese investments.
The objective of this strategy is to appeal to CEE countries to reconsider their active participation in the projects and to convince them that they have been “duped” by promises of Chinese investments. This is reflected in stances opposing China’s “win-win” arguments by suggesting that the CEE countries must approach the Belt and Road Initiative from the “or-or” perspective — “either EU/Western liberal regulations or Belt and Road Initiative/Chinese investment rules”. The emerging underlying argumentation is the appeal for EU unity and a “common China policy”, as requested by German officials.
The methods employed are likely to be based on attacking “symbolic” targets — political leaders who have welcomed the Belt and Road Initiative and who have been already targeted by Western liberal critics on other issues, such as on relations with Russia or Euroscepticism.
Another tactic is to hijack the creation of perceptions on the Belt and Road Initiative, which will continue in the think tank and media spheres, as well as in academic and policy circles.
How should China and the CEE countries react? Should their reaction be negative and antagonizing? The answer is “no”. A purely confrontational response to the containment strategy would mean falling in the trap of those wanting to weaken the original Chinese “win-win” strategy of the Belt and Road Initiative.
Yet leaving the containment strategy unanswered is not a solution either. Now that the Belt and Road Initiative is taking shape on the ground, China and the participating CEE countries must address the problem both at bilateral and multilateral levels. Such an approach must be strategic and adaptive.
This means the updated “Belt and Road Initiative strategic communication 2.0” must combine the original general “win-win” strategy and a case-specific strategic communication aimed at deconstructing rapidly and accurately — through a variety of methods and channels — the negative framing of the Belt and Road Initiative in the participating countries. For China, reacting to negative strategic narratives and discourse does not mean being a “sharp power” disrupting Western liberal societies, as some would like to point.
On the other hand, the participating CEE countries must not fall prey to the trick which consists of making them feel responsible for undermining the EU or Western unity in case they do not follow a “common policy on China” which would be based on framing the Belt and Road Initiative as a threat.
The protectionist measures taken by the Donald Trump administration are seen in Europe as the beginning of a trade war and the EU countermeasures will duly follow.
The EU is angry with Trump for trying to subvert the multilateral trading system, which will heighten the tensions between Washington and Brussels. The problem for the EU is not that relations with the US are worsening; this had to happen sooner or later.
If the leading EU countries — France and Germany — want to become an independent pole in the multipolar world that is being shaped, then they have to reduce the US’ influence in Europe. In this context, the EU needs to take two specific measures.
First, the EU has to formulate a clear and comprehensive foreign policy, even if it means entering into a conflict with the US on some issues. The interests of the EU and the US have not always matched. But the EU has supported the US’ foreign policy even when it was in conflict with its own interests — on Ukraine and Syria for instance. Therefore, the EU has to adopt a more courageous approach.
And second, the EU has to formulate its own security policy by accelerating the process of establishing the European Military Forces (Euroforce) and consigning NATO to history. As long as NATO exists, the US will be a key factor in European security. NATO is an excellent instrument for the US to manage European affairs.
If the EU wants to be an independent pole in contemporary world politics, it has to completely redefine its current position. The precondition for the EU to get out of the very unfavorable framework of cooperation with the US, where it is always seen as a younger partner or minority shareholder, is to improve relations with Russia and China.
From a geostrategic point of view, China regards the CEE countries as an important linking point for the Belt and Road corridors to the larger Western European markets. Although the 16+1 framework is primarily designed as an economic project, its realization raises many political and security issues, because 11 of the CEE countries are members of the European Union and 13 are part of NATO, and they have different experiences of geopolitics and history.
After the dissolution of the Soviet Union, relations between China and the CEE countries have been significantly influenced by the European Union, Russia and the US. China established diplomatic relations with the Baltic states — Estonia, Latvia and Lithuania — in 1991.
It remains unclear whether Russia is ready to guarantee the use of its railroads for Chinese companies that would allow the Baltic states, which harbor a hostile attitude toward Russia, to earn added value.
Despite the aim being to create a transport corridor from China via Russia to Europe, and making the cargo pass through the Baltic states, political factors have already made economic relations between the Baltic states and Russia difficult and in the longer run may diminish the role of the Baltic states’ ports to a minimum in the Europe-Asia cargo chain.
The old European Union countries are opposed to the activities of China in the CEE countries. At a conference of European diplomats in Paris at the end of August 2017, Sigmar Gabriel, then German foreign minister, demanded that China follow a “One Europe” policy, just as European countries follow the “One China” policy.
For the US, the CEE countries including the Baltic states represent a geo-strategic region with great military importance which allows Washington to deter possible Russian expansion by putting continuous political and military pressure on Moscow and adding to the US forces in the region.
In the long run, however, China’s widening global trade network and Russia’s military revitalization will inevitably question the US’ global leadership.
In recent years, EU-China investment relations have basically revolved around two key issues — ongoing negotiations on a bilateral investment treaty, and the EU’s recent initiative to introduce a joint screening procedure for investments in sensitive areas such as media and aeronautics.
But given the new protectionist threats to global trade and investment, there is an urgent need for improved and constructive dialogue between China and the EU.
But this is not possible unless both sides lay the foundations for a level-playing field in their relationship. For China, this means gradual liberalization of sectors heavily guarded against foreign direct investment. And by preparing a credible road map and timetable for further opening up, China can increase its productivity and help avoid major social disruptions.
A joint investment screening procedure to protect strategic EU sectors from foreign takeovers has been proposed against the backdrop of multiple crises plaguing the EU. Greater strategic autonomy shows the need for a careful and joint approach to protect public order and security. Essentially, this mandates a framework which is transparent, predictable and nondiscriminatory toward Chinese investors. At the moment, only 12 EU states have national systems for screening foreign investments, but the coalition of the willing is growing, especially among the largest recipients of Chinese FDI.
For EU members, it is a source of concern if the investor is a Stateowned enterprise, or if the investment is in infrastructure projects in fields such as energy or communications. But rising peer pressure among EU member states wary of China’s surging merger and acquisition spree in critical sectors is a greater obstacle on the road. China’s leadership has the opportunity to address the European public’s and policymakers’ concerns by implementing SOE reform and making public subsidies to companies engaged in FDI more transparent.
Rapprochement between China and the EU on these issues would be welcome news for the future of the rule-based world order, which will indirectly curtail protectionist impulses worldwide. Let’s hope this will happen sooner than later.
The idea proposed by President Xi Jinping in Astana, Kazakhstan, in 2013 soon transformed into an institutional framework with different mechanisms and platforms connecting not only countries and their peoples along the ancient Silk Road but also the world economy at large. This fact is clear today in Central and Eastern Europe, especially in Poland, where the Silk Road and the Amber Road meet.
The most visible indicator of economic connectivity is the trade volume among the countries along the new Silk Road, which exceeded $3 trillion from 2014 to 2016. And China-Poland trade increased more than 20 percent to more than $20 billion in 2017 according to the Polish National Bureau of Statistics, making Poland among the top 10 trading partners of China in the European Union.
The EU and China are committed to strong partnership based on mutual trust and understanding built on years of collaboration. Which is not surprising as the EU-China trade volume is the second highest in the world, with the EU being China’s most important trad-
ing partner and crucial source of foreign direct investment. On the other hand, China is the biggest market for the EU’s goods and commercial services, and second-largest trading partner — after the United States.
Five years after Xi proposed the Belt and Road Initiative, the world economy looks significantly different. China has become a major advocate of globalization and international connectivity, and the Belt and Road Initiative is playing a pivotal role in advancing global trade and exchanges.
The EU strongly upholds the principles of openness and liberalization despite the US’ protectionist moves, as it believes deeper cooperation is crucial for all the parties involved — the EU, China and the world at large.
Stronger trade partnerships, a level playing field and more open markets will help strengthen mutual trust and confidence, and thus facilitate deeper win-win cooperation. As indicated by Chinese leaders many times, and underpinned by China’s recent white paper on “China and the World Trade Organization”, China is committed to fair, reasonable and binding international rules that promote equality, reciprocity and mutual benefit. On this, the EU, as well as Central and Eastern European countries cannot agree more — and they hope Sino-European relations become stronger, so it can better defend international rules and norms.
China and the Central and Eastern European countries launched the “16+1 cooperation” mechanism in 2012. One year later, President Xi Jinping proposed the Belt and Road Initiative. In the five years since then, a new way of developing the 16+1 mechanism has emerged.
The historical dimension of the mechanism is the bilateral relationship between China and individual CEE countries. For the CEE countries, those relationships are full of diversities. But from China’s perspective, the CEE countries form a sub-region with more similarities than diversities.
On the basis of this perception, China tried to improve connectivity among the CEE countries, by proposing the 16+1 cooperation mechanism, which is the second dimension.
The third and most important dimension is the Belt and Road Initiative, which provides the key areas of 16+1 cooperation. An analysis of the “List of Deliverables of the Belt and Road Forum for International Cooperation” and the “Five-year Outcome List of Cooperation Between China and CEE Countries”, issued after the 6th China-CEEC Summit last year, shows the two lists shared the core value of connectivity and prioritized the same five key areas: policy, infrastructure, trade, financial exchange and people-to-people exchange.
The function of the mechanism will be influenced by the uncertainties of globalization, especially because trade protectionism and political populism are challenging the world economic and political order, and US has emerged as a disrupter of international relations.
The changing world will give rise to a new interaction model for global players. China has provided its wisdom to build a community with a shared future for mankind. And despite the rising global uncertainties, China has been defending and promoting globalization, trade liberalization and investment facilitation, even as part of China-CEEC cooperation. So China and the CEE countries should make joint efforts to strengthen the 16+1 cooperation mechanism in order to avoid risks.