IS CHINA LOSING CENTRAL AND EASTERN EUROPE?

IS CHINA LOSING CENTRAL AND EASTERN EUROPE?
WRITTEN BY MICHAEL TRINKWALDER
20 November 2020

It seems that Chinese Foreign Minister Wang Yi missed an excellent opportunity to say nothing during his recent diplomatic outreach tour to Europe. Originally intended to mend Beijing’s frayed relations on the continent, Wang Yi instead ended up threatening the President of the Czech Senate for “his short-sighted behaviour and political opportunism".

The offence in question? A visit to Taiwan to promote commercial relations. However, the real story here is not about yet another instance of Beijing’s hyper-assertive ‘wolf warrior diplomacy’ but that the Czech case is becoming increasingly emblematic of China’s relations with Central and Eastern Europe (CEE). Initially, there were sky-high expectations and enthusiastic support for engagement with China. But once it became clear that the expected economic benefits of cooperation were unlikely to materialise, the enthusiasm waned and frustration began to grow. Yet this pithy little synopsis rings a little hollow when it comes to explaining such a drastic shift in the foreign policy of more than a dozen countries. So why is China losing its appeal in the CEE region and what does that mean for the European Union’s China strategy?

Promise fatigue setting in

The above explanation sounds true enough: lured by promises of substantial Chinese investments, most CEE countries joined the 17+1 initiative that serves as the institutional framework for the Chinese Belt and Road investment initiative in the region. Since twelve of the participating countries are also European Union (EU) member states, the 17+1 initiative has raised fears, particularly among many Western European leaders, that it was set up to undermine European unity — a suspicion supported by the fact that member states like Hungary and Greece have repeatedly blocked common statements on Beijing’s transgressions. However, with more and more countries in the CEE region souring on China, it is worth taking a closer look at its closest economic partners in the region: the Czech Republic, Poland, and Hungary.

The Czech Republic: Torn between pragmatism and human rights

The election of Miloš Zeman as Czech President in 2013 signalled a decisive shift towards a focus on economic relations (with Zeman regularly heaping effusive praise on China). Initially, this strategy appeared to be working quite well with CEFC China Energy, a company with alleged links to the Chinese state, acquiring a curiously broad swath of assets. This apparent success story fell apart when the company’s chairman disappeared during a Chinese corruption probe, and then CEFC was revealed to be nothing but a giant pyramid scheme, leaving behind €450 million in debt.


If the EU truly wishes to make its Eastern members commit to a common strategy, its Western members will also have to give up on their jealously guarded ‘special relationships’ with China.

Even though this debt was ultimately paid by the state-owned Chinese company that took over CEFC, the affair still had a profoundly negative impact on China’s image in the country. Diplomatic relations started to deteriorate soon after, particularly with local Czech politicians taking a vocal stance against Chinese human rights violations. In response, China doubled down on its threatening behaviour, which has so enraged the Czechs that even Beijing’s infamous ‘mask diplomacy’ has failed to make much of a dent. While the national Czech government has been keen to smooth things over, if relations continue to deteriorate at the current pace, a pro-China stance may soon become an intolerable political liability.

Poland: The strategic cold shoulder

In the aftermath of the 2008 financial crisis, successive Polish governments became enamoured with China's seemingly bottomless capacity for investment. During the honeymoon phase, Warsaw joined one Chinese initiative after another and signed on to a comprehensive strategic partnership with Beijing, but overblown hopes for large-scale investments were inevitably disappointed. Yet, unlike the Czech government, Warsaw has been distancing itself from China. This is less due to growing frustration on the Polish side and more a result of the paramount importance Warsaw accords to its relationship with the United States.

Accordingly, the Polish government has been careful to position itself firmly on Washington’s side when it comes to the escalating Sino-American rivalry: For example, Poland is currently on track to pass one of the continent’s toughest cybersecurity laws that would either severely limit or potentially outright forbid Huawei’s participation in Poland’s 5G network. Moreover, Warsaw has not only launched its rival initiative to the Chinese BRI, it has also managed to win Washington’s financial backing for this ambitious undertaking. Interestingly, while the US and Chinese ambassadors to Poland regularly spar on Twitter, Beijing has so far refrained from employing coercive measures against Poland for its ‘anti-Chinese’ actions. With both the US and China vying for Poland's favour, the Polish government appears spoilt for choice.

Hungary: Happy with the scraps?

Hungary is the notable exception to the growing trend of disillusionment with China because, for Hungarian Prime Minister Victor Orban, the Sino-Hungarian relationship is not just about pragmatic cooperation. Instead, the relationship has increasingly become one of ideological affinity. He has repeatedly lauded China as an example of a successful ‘labour-based society’, in contrast to Western economies ‘based on speculation’. To be clear, this ideological affinity is to illiberalism, not communism, with the increasingly autocratic Orban reliably blocking multilateral action aimed at Chinese human rights abuses.

In return for this enthusiastic support as well as its China-friendly business policies, Hungary has become the largest recipient of Chinese Foreign Direct Investment in the CEE region. Currently this still only amounts to a total investment of about €2.1 billion, which pales in comparison to the €46.5 billion that Hungary has received in the last two EU budget periods. Even when Chinese investments do flow, they tend to become a major source of contention — case in point the railway between Budapest and Belgrade. The project has been stuck in limbo for years due to violations of EU law, and by some estimates would take up to 2,400 years to become profitable. Although the government majority in parliament has classified the financial details of the deal, the only Hungarians sure to benefit are close allies to Orban. Ironically, Orban’s eagerness to please has even started to make Beijing uncomfortable, due to the detrimental effect it’s having on general EU-China relations.

A chance to rethink EU-China relations

The picture that emerges for the region appears decidedly mixed but it is far less monolithic than is often assumed in many Western capitals. Far from being Trojan horses controlled by Beijing, not even its most important economic partners in the CEE region have lost their agency to oppose China. As demonstrated by Hungary, they might very well choose not to, but it will still be a decision made in Budapest rather than Beijing. Arguably, the prospects for a more cohesive EU approach towards China are better than they have been in years: a combination of disappointment with Beijing’s empty promises, uneasiness over its growing assertiveness, and simmering resentment over its mishandling of the COVID-19 pandemic has accomplished the remarkable feat of uniting Europeans in their anger against China.

While common feelings are a far cry from a common strategy, feelings can serve as a powerful driving force. So, instead of treating the twelve EU member states participating in the 17+1 initiative as a threat to European unity, Brussels should make an effort to include them as equal stakeholders in its China strategy. Bringing in more voices from the CEE into discussions on China would be a start, but the EU should also try to incorporate already existing concepts from the region, like the previously mentioned Polish ‘Three Seas Initiative’. However, if the EU truly wishes to make its Eastern members commit to a common strategy, its Western members will also have to give up on their jealously guarded ‘special relationships’ with China. A strategy devised between Paris and Berlin alone might be more ambitious, but it would do little good if it left half of the Union out in the cold.

DISCLAIMER: All views expressed are those of the writer and do not necessarily represent that of the 9DASHLINE.com platform.

Author biography

Michael Trinkwalder is the YPFP Europe Fellow as well as a Mobility Security Analyst at A3M Mobile Personal Protection. He is particularly interested in the EU’s Common Foreign and Security Policy, the implications of the rise of China, and Euro-Atlantic security issues. Previously, he has worked at the NATO PA, the Center for Public Affairs of the German Armed Forces, and AICGS at the Johns Hopkins University. Image credit: Flickr/European Council President. www.fotavgeia.blogspot.com