China’s Belt and Road Initiative in Central and Eastern Europe: stuttering to a halt?
China’s Belt and Road Initiative in Central and Eastern Europe: stuttering to a halt?
WRITTEN BY DR JEREMY GARLICK
12 June 2023
Central and Eastern Europe (CEE) has long had an odd status with regard to China’s efforts to boost engagement with regions globally via the Belt and Road Initiative (BRI). From Beijing’s perspective, CEE stands at an awkward crossroads — geographically and ideationally — between Russia, Western Europe, and the developing world. For the Chinese, it is only logical to place the region in the Global South since it is apparently in need of BRI investments like other economically developing regions. However, the Global South categorisation runs counter to local perceptions and the region’s geographical position in Europe.
During the Cold War, CEE countries were under Soviet influence. As communist states, they and China should have been brothers in arms. But after the Sino-Soviet split in 1960, they drifted apart. The end of the Cold War widened the divide even further due to CEE’s wholesale rejection of communist regimes. It was not until two decades later that China sought to rebuild relations in a serious way with the 2012 launch of the 16+1 framework for cooperation between China and CEE countries.
The BRI’s unfulfilled potential in the region leaves the connectivity and cooperation aims of the initiative largely on the shelf, with the main successes for China located in Western Balkan countries that are not EU members.
Optimism was high. Many CEE countries had recently joined the EU and needed investment. China seemed ready to provide it. Beijing offered a USD 10 billion credit line for the region. When the Belt and Road Initiative was launched a year later, it seemed logical to place China-CEE cooperation into the overarching framework of the BRI. CEE began to be conceived — and to conceive itself — as a gateway to Western Europe for Chinese trade routes. Broadly speaking, CEE countries began to perceive China as an opportunity rather than a threat.
However, a decade after its launch, progress on China-CEE cooperation has almost ground to a halt. Even before the Russian invasion of Ukraine — which China does not openly criticise — perceptions of China had deteriorated in countries such as Lithuania and the Czech Republic. Both nations are now looking to build ties with Taiwan — in contravention of Beijing’s wishes. Across the region, the implementation of Chinese-led infrastructure and investment projects has been generally far slower than anticipated. The lack of progress has resulted in the 16+1 framework arguably becoming a “zombie mechanism” — a platform for boosting relations which exists in name only, without any real substance to cooperation.
Structural problems
From the outset, there were structural problems with the 16+1 arrangement. Of the sixteen countries included, eleven were EU members, while five — all from the Western Balkans — were not. The EU grew suspicious of Chinese intentions, believing that Beijing was trying to ‘divide and conquer’ Europe.
Another issue is the exclusion of Belarus, Ukraine, and Moldova from the grouping — even though they are located in the CEE region. Of course, adding them to the China-CEE cooperation framework would have been seen as a challenge to Russia’s regional influence. The omission of these three countries resulted in a redefinition of CEE according to the Chinese rather than the local conception of how the region should be ideationally constructed.
What is remarkable is that initially, for the first decade of the 16+1 cooperation mechanism, CEE countries went along with the Chinese ideational rearrangement of their backyard. They participated without criticism in annual 16+1 cooperation forums, allowing China to believe that the region was positively accommodating Chinese interests. China-CEE cooperation was even expanded when Greece was added to the framework in 2019 to make it ‘17+1’, stretching the conception of CEE even further away from its European definition.
However, trouble was brewing. By 2017, journalists in the Czech Republic were complaining about China not fulfilling its investment promises. The construction of a proposed high-speed railway between Belgrade and Budapest was held up due to EU regulations concerning the legality of the tender process concerning the Hungarian part of the line. In 2021 and 2022, the number of participating nations shrank to 14 after the three Baltic states — first Lithuania, then Estonia and Latvia — withdrew from the cooperation platform.
Belt and Road slowdown
In 2023, the stuttering near-collapse of the 16/17+1 platform leaves the progress of the Belt and Road in CEE in a state of uncertainty. The implementation of BRI projects has been uneven. Some countries — especially those in Southeast Europe — have received more investment than others.
Most notable is the port of Piraeus in Greece. Beijing sees the port as a vital link in its BRI trade chain from Asia to Europe via the Suez Canal. After a Chinese company bought part of the container port, trade volumes increased exponentially. Record profits were recorded in 2021. The Greek government continues to support the privatisation of the port. On the other hand, some locals are reportedly disgruntled due to “poor work conditions and delayed investments”.
A large part of Chinese infrastructure investment has gone into the Western Balkans. Serbia has received the highest amount in investment (EUR 7 billion), with Bosnia and Herzegovina, Montenegro, and North Macedonia also attracting sizeable projects. None of these countries are EU members, which makes it easy for Beijing to negotiate bilateral deals without having to deal with EU bureaucracy.
Notable projects include the ongoing Chinese construction of a highway in tiny Montenegro to link its main port to the interior and on to Serbia. Controversy has swirled around this project since its inception, with critics in the EU concerned about the debt load incurred. Yet the Montenegrin government insists that it can service the debt and that it urgently needs the highway to boost the economy. Indeed, in 2023 a further contract was signed with another Chinese company to build a second highway along Montenegro’s coast.
Projects in Serbia include the aforementioned railway from Belgrade to Budapest and, famously, a “friendship bridge” over the Danube River which was opened in 2014. In 2022, a contract was signed for another bridge, a new highway, and a multimillion-dollar sewer system. It seems at least from the Serbian perspective that cooperation under the label of BRI infrastructure investments has gone swimmingly.
On the other hand, the data surprisingly reveal that nine out of the original 16 members of the 16+1 cooperation forum had received no Chinese infrastructure investment at all by 2020. In particular, the Baltic states and the Czech Republic had attracted no projects, which may partly explain their disgruntlement with Beijing.
At any rate, it seems that one has to look elsewhere and beyond infrastructure to understand all aspects of what the Chinese government intends to achieve with the BRI in the CEE region. It is often not properly taken into account that the BRI has ideational as well as material aspects. In CEE, as in other regions, Beijing uses the Belt and Road and the 16+1 to extend its influence as well as to find opportunities for Chinese companies. The widespread dissatisfaction with the record of Chinese investments reveals that one needs to examine questions of influence when evaluating the impacts of the BRI in the CEE region.
The BRI as a mechanism for increasing influence
Although the popular understanding of the BRI is that it is about transport and energy infrastructure — such as roads, railways, ports, and power plants — there can be little doubt that China also uses it as a medium for establishing influence in what it classifies as developing regions. Beijing uses regional cooperation platforms — such as the Shanghai Cooperation Organisation in Central Asia and the Forum on China-Africa Cooperation (FOCAC) in Africa — to smooth the way for its political and economic interests. This method was repeated in CEE via the establishment of the 16+1 mechanism in 2012, albeit with less success than in other regions.
However, Chinese influence has demonstrably increased in some countries. The most notable examples, as already outlined above, are Serbia and Greece, whose governments have welcomed Chinese investments. Serbians, disillusioned with the slow pace of EU accession, are consistently pro-Russia over the long term. Hence, by association, they also tend to side with China. Greece, which owes the EU a huge debt and was forced into austerity measures by Germany, is looking for alternative sources of finance. China has supplied investment capital and construction know-how while the EU has mainly become a creditor.
There are other states whose heads have turned towards Beijing. The Hungarian government has long been amenable to an increased Chinese presence, including the planned establishment of a Fudan University campus in Budapest. In Montenegro, the government has taken on what some see as an unsustainable debt load to finance a Chinese-constructed highway, the first in the country.
Thus, the BRI and the 16+1 have been used to cultivate relationships with the leaders of CEE countries where possible. Such friendships can then be turned into favours such as voting in China’s favour in the United Nations or support for the ‘One China’ policy (which states that Taiwan is part of China). For instance, in October 2022 a motion to hold a debate on China’s alleged human rights violations in Xinjiang at the UN was rejected thanks to votes from BRI signatory nations.
On the other hand, Russia’s invasion of Ukraine has impacted China’s progress in gaining influence in most of the CEE region. China and Russia are frequently linked in the minds of many citizens, and Beijing’s reluctance to condemn the invasion has confirmed the fears of those — including some EU leaders — who see China as a threat to Europe. It seems that Chinese influence, while significant in the Western Balkans, has come up against a hard wall of resistance elsewhere, most notably in the Baltic states.
Final verdict: could do better, won’t do better
The BRI’s original aim suggested that China would invest in infrastructure or greenfield projects which would bring economic opportunities to countries in the region. However, not much along these lines has materialised despite the rhetoric from the Chinese side and a degree of initial enthusiasm from the CEE states. The BRI’s unfulfilled potential in the region leaves the connectivity and cooperation aims of the initiative largely on the shelf, with the main successes for China located in Western Balkan countries that are not EU members.
The result is that the BRI has had a relatively modest material impact on CEE, while China’s additional aim of exerting influence in the region has also only been successful in selected countries — mainly those which already belong to the Eurosceptic camp. At the same time, there is not as much coordination among the CEE countries concerning China policy as one might expect. This surprising lack of communication and cooperation on China policy leaves the region still open to further Chinese attempts at building support. However, it seems unlikely that the current situation will lead to much change of heart in the nations which tend to view China negatively, while those that are indifferent are equally likely to remain so.
Overall, what remains of the BRI and 16+1 cooperation in the CEE region is the following: some infrastructure projects and influence in the Western Balkans and Hungary; disgruntlement in the Baltic states and the Czech Republic; and general lack of interest elsewhere amid suspicions of China’s intentions regarding Russia and Ukraine. At this stage, it is difficult to see how the BRI can be (re-)established with as broad and deep an impact on regionalisation as the original promotion of the initiative seemed to suggest.
DISCLAIMER: All views expressed are those of the writer and do not necessarily represent that of the 9DASHLINE.com platform.
Author biography
Dr Jeremy Garlick is the director of the Jan Masaryk Centre for International Studies, Prague University of Economics and Business. He is the author of The Impact of China’s Belt and Road Initiative: From Asia to Europe (Routledge). Image credit: Flickr/European Council President.