China-CEEC Cooperation: Course of Development and Prospect

COURSE OF DEVELOPMENT AND PROSPECT

China and the Central and Eastern European Countries (CEEC) cooperation mechanism has developed out of nothing and gone into depth, promoting pragmatic cooperation between China and the CEEC in multiple fields and displaying strong development tenacity. To look at the course of its development, China-CEEC cooperation has covered three stages of development, the launching period (2011-2012), the golden period (2012-2017) and the deep water period (2017-present). At present, China-CEEC cooperation has entered into deep water area and it is worth watching how long this period will last and if China-CEEC cooperation will enter into a new stage of development.

The Launching Period of China-CEEC Cooperation (2011)

China’s rapid economic development provided important dynamics for the country to conduct economic and trade cooperation with the CEE countries, whereas with their development in areas like infrastructure construction and equipment manufacturing industries, Chinese enterprises have gained strong international competitiveness therein.

Since 2008, the European Union (EU) had been affected by sustained impact of the outbreak of global financial crisis, the Euro-debt crises, the Ukrainian crisis, and the refugee crisis. Within the EU and affected by the debt crises, the CEE countries began to search for new development opportunities, countries closely following China’s development achievements with great interest.

As comparative strength of one went up and that of another went down between China and Europe, there appeared quite a few problems in the development trend of EU’s China policy and in bilateral relations, which led to China’s reviewing its relations with

Europe, focusing on building a more comprehensive, balanced and sustainable China-EU relations by discovering necessary new areas and new growth points of bilateral cooperation and giving full considerations to differentials and different interests within the EU while maintaining normal development of China-EU economic and trade relations. Therefore, promoting subregional cooperation within the EU became a new angle for China to develop relations with Europe. In face of the opportunities that core European countries had no time to look after the CEE region and that the CEE countries would like to develop more extensive foreign cooperative relations in order to free themselves from economic predicaments, China seized the window of opportunity to develop cooperative relations with the CEE countries and successfully launched China-CEEC cooperation.

In June 2011, then Chinese Premier

Wen Jiabao visited Hungary, taking the first step to officially launch ChinaCEEC economic and trade cooperation. China proposed that as a bridge linking the markets of the East and West, the CEE countries could serve as a bridgehead of China-EU cooperation. At the same time, China regarded the CEE countries as trustworthy friends and important cooperation partners, and would take the CEE region for a strategic focal point for implementing either the foreign trade market diversification strategy or the strategy for Chinese enterprises to go global. All this had laid an important foundation for the ChinaCEEC leaders’ meeting of 2012.

The Golden Period of China-CEEC Cooperation (2012-2017)

In April 2012, the first China-CEEC cooperation summit was held in Warsaw, which officially launched the mechanisms of “16+1” cooperation. The meeting decided to take 12 measures including forming the Secretariat of ChinaCEEC Cooperation within the Foreign Ministry of the PRC, setting up a special concessional loan of $10 billion, and establishing a China-CEEC Investment Fund, with profound influence on the development of China-CEEC cooperation in the years to come.

Ever since its coming into being, China-CEEC cooperation had entered into a golden period of development, the depth, width and influence of the bilateral cooperation reaching a high level, which found concrete expression in the following,

First, a series of important results were produced. During the period, China-CEEC cooperation mechanisms continued to improve. Specialized cooperative platforms have been set up respectively covering areas such as tourism, infrastructure construction, financial services, agriculture and think tanks with ever increasing participants. Spurred by China-CEEC cooperation mechanisms, Chinese enterprises took an active part in making investments and doing business in the CEE countries. Facilitated by the $10 billion special concessiond loan, the size of ChinaCEEC economic and trade cooperation kept expanding, and a series of large infrastructure and energy investment projects began successively including the South-North expressway in Montenegro and Stanari thermal power plant in Bosnia and Herzegovina. Promoted by two stages of the China-CEEC Investment Cooperation Fund, a number of medium-sized and small investment cooperation projects were launched in the CEE countries.

Meanwhile, people-to-people exchanges between China and the CEE countries developed fast. The number of tourists from China to the CEE countries grew rapidly after Serbia, Montenegro, Bosnia and Herzegovina, and Albania adopted visa exemption or seasonal visa exemption policies for Chinese citizens. China opened several direct international air routes to the CEE countries. Major Chinese financial institutions set up affiliated agencies in the CEE countries to serve the increasing needs of enterprise investments and people-to-people exchanges. ChinaCEEC education cooperation entered into an active period, one after another Chinese university set up language training agencies, cooperation and exchange programs, and academies and institutes of CEE regional and country studies. Chinese think tanks established centers and networks on CEEC studies and made significant headways in a short period of time.

Second, by taking the express train of Belt and Road construction, connectivity cooperation was pushed forward in a profound way. The Belt and Road Initiative (BRI) included 16 CEE countries into the array of BRI countries, which enabled the CEE countries to give full play to their geopolitical advantage and become an important hub of interconnectivity. Projects like the Budapest-Belgrade Railway and China-Europe Land Sea Express Line went underway respectively, and new freight train services between China and Europe opened continuously, heightening the level of bilateral cooperation. Especially several Chinese infrastructural construction projects were launched in the Balkans, answerable to rapid infrastructure development in the region, and interconnectivity became another important signature of China-CEEC cooperation.

Third, frequent exchange of highlevel visits kept up the heat of ChinaCEEC cooperation. During the period, President Xi Jinping and leaders of the CEE countries made frequent and intensive mutual visits, forcefully heightening the level of bilateral strategic cooperation. Under the political guidance of leaders of both sides, China and the CEE countries reached important consensus in many a field, and bilateral cooperation continued to produce results with quality. In 2015, the China-CEEC leaders’ Suzhou Summit issued the Medium-Term Agenda for Cooperation Between China and Central and Eastern European Countries, which comprehensively summarized cooperation results, and made arrangements for future co

operation direction, while pointing out that China-CEEC cooperation would not replace any existing bilateral cooperation mechanism or platform but rather would support the construction of China-EU connectivity platform by interfacing EU’s major initiatives and plans and accelerating the elevation of the level and size of China-CEEC relations.

It also relied on a favorable external environment for China-CEEC cooperation to have enjoyed full-blown progress in this period. First of all, Chinese economy put up a glaring performance between 2012 and 2017, the country introduced a series of support policies for overseas investment, and the BRI progressed fast in an orderly way, all this pushing China-CEEC cooperation forward at a high speed. Secondly, although the EU paid increasing attention to potential risks to it arising from China-CEEC cooperation such as whether the cooperation violated the EU rules or would lead to its “division”, to a certain degree it would like to see the cooperation produce practical results so as to help its overall economic recovery, which helped create objective conditions for China-CEEC cooperation. Third, although the United States closely followed China-CEEC cooperation, it did not openly take substantial measures to intervene. Since 2012, the Obama administration had implemented the pivot to the Asia-Pacific strategy, shifting its strategic focus to Asia and retrenching the deployment of its force in Europe. Against this backdrop, between the US and China one “moving out” and the other “moving in” regarding the CEE region also to a certain degree avoided too much conflict of interest between both sides.

have undertaken the projects of “China’s influence” and “China’s observers”, and they and the Mercator Institute for China Studies (MERICS) in Germany have produced an array of reports that keep discrediting China-CEEC cooperation, putting China-CEEC cooperation under continuously spiraling opinion pressure.

Fourth, the fact Chinese economy has moved into a new normal affects ChinaCEEC cooperation. As internal and external situation undergoes profound changes, China has seen its economy switching from a stage of high speed development to that of a high quality one with increased downward pressure. Against this background, China places more emphasis on high quality development in overseas investment and economic and trade cooperation. This is good news for long-term economic development but at the same time inevitably brings about throes of short-term readjustment, which in turn causes certain pressure on China-CEEC cooperation. In particular, the COVID-19 epidemic that broke out by the end of 2019 has further increased resistance to China-CEEC cooperation in economic development and investment, resulting in the cooperation continuing to wander in the deep-water area.

Prospect of China-CEEC Cooperation and Policy Recommendations

like market access and protection of intellectual property rights so that the CEE countries can see more opportunities of theirs in an increasingly open Chinese market. Furthermore, for Chinese enterprises going global, especially those that have already made investments and done business in the CEE countries, it is necessary to increase investment in the CEE region in a targeted way with a view to promoting local economic and social development.

Second, it is necessary to further tap the development potentials of China-CEEC coopera- tion and resolve existing problems therein. On the one hand, it is necessary to keep up China-CEEC economic, trade and investment cooperation, further increase investment made by private enterprises, deeply tap China-CEEC cooperation potentials in high-precision digitalization and smart machinery manufacturing industries, and especially promote the interfacing of “hidden champions” in relevant industries, fully tapping complementary potentials between both sides in market, knowledge and resources. It is necessary to increase cooperation between both sides in people-to-people exchanges, facilitate still more cooperation results in the fields of "Anime, Comic and Games", movies and TV dramas, production of variety shows, tourism and education, focusing on achieving win-win results of cultural industries and social effect. On the other hand, it is necessary for China and the CEE countries to appropriately resolve problems existing in the cooperation in a timely manner. It is necessary for China to timely respond to the concerns of the CEE countries, actively resolve various accumulated and new problems in bilateral cooperation, especially such problems as trade deficit, uneven implementation of investment projects, and difficulties in access for agricultural products. At the same time, it is necessary for both sides to make efforts to enhance mutual political trust, deepen economic and trade cooperation, and heighten the level of people-to-people exchanges, guiding ChinaCEEC cooperation to the road of high quality development.

Third, it is necessary to uphold the larger interest of China-EU relations so as to help develop China-CEEC cooperation. As economic and trade relations is the number one priority of China-EU relations and the foundation for China-CEEC relations, it is necessary for both the Chinese and EU sides to further consolidate the results achieved in the China-EU Bilateral Agreement on the Cooperation on, and Protection of, Geographical Indications (GI Agreement), accelerate the progress of the talks on China-EU bilateral investment agreement with a view to reaching the agreement as soon as possible, and creating conditions one way or another to launch feasibility studies on China-EU free trade zone so as to create favorable conditions for China-CEEC economic, trade and investment cooperation. At the same time, it is necessary for China to work towards more results with major EU countries on industrial chain development and industrial cooperation, helping advance China-CEEC cooperation in fields like industrial chain. On top of that, it is necessary for China and the EU to tap potentials for bilateral cooperation centered on important initiatives such as the BRI, building multi-dimensional interconnectivity and heightening the level of pragmatic cooperation. In this process, the CEE countries may bring into full play their geographical advantage as a logistic hub in order to promote deep-going and pragmatic development of ChinaEU interconnectivity cooperation.

Fourth, it is necessary to seize and use any fresh turning point in search of opportunities for China-CEEC cooperation. Since taking office, US President Trump has pursued the “America First” policy and wielded the club of protectionism and unilateralism to the dismay of the EU and the CEE countries. At the same time, China has all along gone by the policy “seeking common ground while preserving differences” and “mutual benefit in a win-win situation” which appeals to Europe including the CEE countries. It is necessary for China to actively develop close partnerships with the EU and its member states, conducting cooperation in fields like 5G, making investments and doing business, and peopleto-people exchanges, and countering US pressure by raising China-EU and China-CEEC cooperation to a still higher level. Impacted by the COVID-19 pandemic, European countries have been bogged down in predicaments. China has actively provided assistance to the best of its ability, dispatching medical assistance teams to European and the CEE countries like Italy, Britain and Serbia, strengthening international cooperation in public health with the European side, and further enhancing confidence of the CEE countries in cooperation with China.

In general, the CEE countries at present still have strong interests in cooperating with China. It is necessary for China to take high quality cooperation for the breaching point by releasing good news to the outside world through comprehensively deepening the reform and continuing to expand opening up, with a view to keeping to the two basic orientations of promoting the development of China-EU relations and advancing the BRI construction, and at the same time actively upholding the greater interest of China-EU relations, deepening China-EU cooperation in various areas, and advancing China-CEEC cooperation toward longterm, stable and sustainable development.

In general, the CEE countries at present still have strong interests in cooperating with China.