China & CEE Coun­tries Alight Fast Track of Co­op­er­a­tion

China Today (English) - - CONTENTS - By LI GANG

SINCE the es­tab­lish­ment in 2012 of the “16+ 1” co­op­er­a­tion mech­a­nism, China and the Cen­tral and East­ern Europe ( CEE) coun­tries have achieved rapid growth in the ar­eas of trade and in­vest­ment, cul­tural and ed­u­ca­tional ex­changes, and po­lit­i­cal mu­tual trust. The in­cep­tion of the Belt and Road Ini­tia­tive has also en­hanced co­op­er­a­tion be­tween the two sides. The greater num­ber of block trains reg­u­larly ply­ing be­tween China and CEE coun­tries has mo­ti­vated more Chi­nese cities and prov­inces to ramp up trade and eco­nomic deal­ings with these na­tions and high­light their spe­cific ad­van­tages and re­quire­ments. Lo­cal level in­ter­ac­tion is con­se­quently be­com­ing a new im­pe­tus to­wards height­ened co­op­er­a­tion with coun­tries in Cen­tral and East­ern Europe.

Trade and In­vest­ment a Dy­namic Growth Point

In­vest­ment and trade are with­out doubt the most dy­namic growth points in the “16+1” mech­a­nism. In 2015, trade be­tween China and the 16 CEE coun­tries to­taled US $56.22 bil­lion – US $1.13 bil­lion more than in 2013. Trade with CEE coun­tries, mean­while, ac­counts for 8.1 per­cent of the to­tal China-Europe trade vol­ume – 0.6 per­cent­age points higher than in 2013. Among the 16 coun­tries, China’s top three trade part­ners in 2015 were Poland, with trade to­tal­ing US $17.09 million, the Czech Re­pub­lic, with trade to­tal­ing US $11.01 million, and Hun­gary, to­tal trade hav­ing hit US $8.07 million.

From their lo­ca­tion in the hin­ter­land of the Euro­pean con­ti­nent, the CEE coun­tries have the back­ing of the EU mar­ket. Tak­ing into ac­count their con­sid­er­able ad­van­tage as re­gards la­bor costs, they are ideal des­ti­na­tions for Chi­nese en­ter­prises’ in­vest­ment and pro­duc­tion. Rel­a­tively less de­vel­oped than their Western neigh­bors, CEE coun­tries have a clear need for in­fra­struc­ture con­struc­tion and in­vest­ment. They are there­fore fast be­com­ing a fa­vored re­gion for Chi­nese en­ter­prises’ for­eign in­vest­ment. Ac­cord­ing to the 2014 Sta­tis­ti­cal Bul­letin of China’s Out­ward For­eign Di­rect In­vest­ment, China’s FDI stock in the 16 CEE coun­tries stood at US $ 300 million in 2007. Since then that fig­ure has steadily risen year by year, hav­ing hit US $1 bil­lion in 2011 and US $1.7 bil­lion in 2014, al­most five-fold the 2007 level. Hun­gary is the most-fa­vored in­vest­ment des­ti­na­tion, with a to­tal

US $560 million of DFI stock from China in 2014, fol­lowed by Poland with US $330 million and the Czech Re­pub­lic with US $240 million.

The Belt and Road Ini­tia­tive a Mo­ti­vat­ing Force

The CEE coun­tries are a junc­tion for Europe- Asia in­ter­ac­tion. They there­fore con­sti­tute the key­note of the Silk Road Eco­nomic Belt and a main node in con­struc­tion of the mod­ern Silk Road Eco­nomic Belt. In June 2015, China and Hun­gary signed an MOU on build­ing the Silk Road Eco­nomic Belt and the 21st-Cen­tury Mar­itime Silk Road. The first co­op­er­a­tion doc­u­ment signed be­tween China and a Euro­pean coun­try, it sig­ni­fied the key role of CEE coun­tries within China’s geopo­lit­i­cal strate­gic lay­out. Hun­gary’s cap­i­tal, Bu­dapest, is known as the “heart of Europe,” a geo­graphic po­si­tion that makes it a gate­way for the Silk Road Eco­nomic Belt to Europe as a whole. Af­ter com­ple­tion of the Hun­gary-Ser­bia Rail­way, and of the ex­press rail link­ing China and Europe, Chi­nese com­modi­ties can upon ar­rival in the Greek port city of Pi­raeus be packed into freight cars and trans­ferred by rail to Hun­gary via Mace­do­nia and Ser­bia, and on­wards from there to Western Europe. This will con­sid­er­ably shorten the lo­gis­ti­cal time­frame be­tween China and Europe. Com­ple­tion of these rail­ways will ren­der Hun­gary a lo­gis­tics node be­tween Asia and Europe, and a pivot in Europe for the Silk Road Eco­nomic Belt.

The Hun­gary-China co­op­er­a­tion agree­ment func­tions as a model for other Euro­pean coun­tries to fol­low. More CEE coun­tries have strength­ened mu­tu­ally ben­e­fi­cial co­op­er­a­tion with China, search­ing out points of mu­tual in­ter­est, and ac­tively par­tic­i­pat­ing in con­struc­tion of the Belt and Road. The Czech Re­pub­lic, for in­stance, signed an MOU with China, its third largest trad­ing part­ner, last Novem­ber. Among the 16 CEE coun­tries, the Czech Re­pub­lic is the third largest des­ti­na­tion for China’s out­ward FDI stock. When Chi­nese Pres­i­dent Xi Jin­ping vis­ited the Czech Re­pub­lic last March, he and his coun­ter­part Mi­los Ze­man agreed to el­e­vate bi­lat­eral re­la­tions to a strate­gic part­ner­ship, boost bi­lat­eral trade and in­vest­ment, and pro­mote in­vest­ment and co­op­er­a­tion in the ar­eas of nu­clear power, high-speed rail, and fi­nance. A close neigh­bor of Ger­many, the Czech Re­pub­lic links Cen­tral, East­ern and Western Europe, and is com­mit­ted to act­ing as a fi­nance and lo­gis­tics cen­ter for China’s co­op­er­a­tion with CEE coun­tries.

Lo­cal Gov­ern­ments’ Co­op­er­a­tion a New En­gine

Since the first block train route opened in 2011, eight in­ter­na­tional block train lines have con­nected China and Europe, in­clud­ing Chongqing- Xin­jiang- Europe, Chengdu-Europe, Zhengzhou-Xin­jiang-Europe, SuzhouManzhouli-Europe, Wuhan-Xin­jiang-Europe, Chang­shaEurope, Yiwu- Xin­jiang- Europe, and Europe- HarbinShenyang. Con­struc­tion and im­prove­ment of in­ter­con­nected in­fra­struc­ture has drawn cities along these rail­ways much closer, greatly fa­cil­i­tat­ing bi­lat­eral trade. Grow­ing eco­nomic and trade ex­changes at lo­cal level are be­com­ing a pow­er­ful new de­vel­op­ment high­light. Ningbo is a case in point, ev­i­dent in the fol­low­ing as­pects:

First, Ningbo has given a full play to its port, and strength­ened co­op­er­a­tion with coun­tries par­tic­i­pat­ing in the Belt and Road Ini­tia­tive, es­pe­cially CEE coun­tries. In 2014, the trade vol­ume be­tween Ningbo and CEE coun­tries hit US $2.44 bil­lion, ac­count­ing for five per­cent of China’s to­tal trade vol­ume with these na­tions. By the end of 2015, CEE coun­tries’ FDI stock in Ningbo had hit US $65.8 million, while Ningbo’s FDI stock in CEE coun­tries stood at US $14.33 million, so lead­ing Chi­nese cities in this re­gard.

Sec­ond, Ningbo has es­tab­lished a long- term co­op­er­a­tion mech­a­nism with CEE coun­tries. The mu­nic­i­pal gov­ern­ment is­sued doc­u­ments in the first half of 2015 boost­ing com­pre­hen­sive co­op­er­a­tion with CEE coun­tries, stip­u­lat­ing that the gov­ern­ment will ear­mark a spe­cial fund of RMB 85 million an­nu­ally, and for­mu­late pref­er­en­tial poli­cies to pro­mote econ­omy, trade, cul­ture, and tourism co­op­er­a­tion.

Third, Ningbo boasts a high- level plat­form in this re­gard. Ac­cord­ing to the “Suzhou Guide­lines,” the fruit of the Fourth Lead­ers’ Meet­ing of China and CEE Coun­tries held in Suzhou in Novem­ber 2015, Ningbo will this month host a min­is­te­rial con­fer­ence on trade and eco­nomic pro­mo­tion and an in­vest­ment and trad­ing expo.

Sub- re­gional co­op­er­a­tion be­tween China and CEE coun­tries is a key part of Sino-Euro­pean re­la­tions. The “16+1” mech­a­nism is a new plat­form that will strengthen Europe’s re­gional in­te­gra­tion. The Belt and Road Ini­tia­tive as pro­posed by China is open and in­clu­sive, and wel­comes all coun­tries’ par­tic­i­pa­tion. It is an ex­plo­ration of new path and new model of global gover­nance.

Li Gang, PhD in eco­nom­ics, is a re­search fel­low at the In­sti­tute of Euro­pean Stud­ies in Chi­nese Academy of So­cial Sciences. From 2010 to 2011, he did re­search on EU re­gional pol­icy at the Depart­ment of Pub­lic Ad­min­is­tra­tion at Era­sums Univer­sity...

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