China, Europe and Western Balkans
By Genc Mlloja
Albanian Daily News
Published July 5, 2018
In its seventh year since being launched in 2012 as a multilateral platform facilitating the cooperation between China and 16 Central and Eastern European countries (CEEC), the protagonists of the 16+1 mechanism seem active in their search of new ways for its advancement under new circumstances.
The 7th CEEC-China 16+1 Summit, which will take place in the Bulgarian capital, Sofia, on July 6-7, will be an occasion to elaborate new perspectives of its progress against the background of the up-to-now achievements as well as the challenges stemming from the alarm raised by many Western European observers and policymakers on the potential risks of growing Chinese presence in Eastern Europe, claiming that Beijing's major interest in engaging with the region is a part of its long-term strategy to undermine EU unity.
Under the theme "Advancing 16+1 Cooperation Platform - the Way Ahead" the annual China-CEEC think tank conference, which was held on June 29 in Sofia ahead of the Summit, dealt on some of these topics highlighting that by no means a new perspective of the 16+1 cooperation increases these kinds of concerns which, have been raised many times since platform's establishment.
As a matter of fact, it has already become a ritual that every year on the eve of the 16+1 Cooperation Summit political and economic experts, analysts and pundits worldwide, but especially those in China and Europe, wrangle with each other on the spirit and intention of this initiative with the Chinese insisting it is about "win-win" cooperation while certain Western circles consider it as a 'Trojan horse' threatening EU's interests.
The 16+1 Cooperation framework has been launched by China with the declared aim of intensifying and expanding cooperation with 11 EU member states and five Balkan countries (Albania, Bosnia and Herzegovina, Bulgaria, Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Montenegro, Poland, Romania, Serbia, Slovakia, Slovenia, Macedonia) in the fields of investments, transport, finance, science, education, and culture.
The expected Sofia Summit was preceded by the first one which was held in Warsaw, Poland, in 2012 and subsequent summits took place in Bucharest, Romania (2013); Belgrade, Serbia (2014); Suzhou, China (2015); Riga, Latvia (2016) and Budapest, Hungary (2017). Besides the events of 2014 and 2015, which were held in Serbia and China respectively, the other 5 were hosted by countries which are members of the European Union.
In the framework of the initiative, China has defined three potential priority areas for economic co-operation: infrastructure, high technology, and green technology, which will be high on the agenda of the Summit which is expected that, apart from the heads of government and state at the Sofia summit in 2018, will be attended by about 1000 business people, about half of them from China, Bulgarian official sources have announced.
"I am grateful to Chinese premier Li Keqiang, Prime Minister Viktor Orban, to each of my colleagues for their support for Bulgaria to host the next summit on the 16 + 1 initiative," Bulgarian Prime Minister Boiko Borissov said as quoted by The Sofia Globe on November 27, 2017.
"Investments from China are precisely what I have always said will be beneficial for the Balkans - infrastructure projects," Borissov noted.
China Says Not Seeking to Undermine EU
Is China using 'divide and rule' tactics to gain influence in Europe? China says 'No!' but, however, it recognizes that there are worries about its cooperation with Central and Eastern European countries.
"Certainly, there has been some worry recently in some European countries about the 16+1 cooperation," deputy foreign minister Wang Chao said speaking on June 29 as quoted by the state-run Xinhua news agency while Chinese Premier Li Keqiang gets ready to go to this year's 16+1 Summit in Sofia. Instead Beijing's senior diplomat reiterated assurances of China's support for European integration saying China is not seeking to undermine the European Union. "A unified, stable, prosperous EU is in line with China's basic interests. China's position on this has never changed," he said. "16+1 cooperation is open and transparent. We believe that promoting 16+1 cooperation and promoting China-Europe ties are not mutually exclusive."
While cooperating with central and eastern European countries, China respects the EU's jurisdiction over trade, investment and other areas, and EU rules on government purchasing, Wang said. He noted that 16+1 cooperation is a cross-regional platform jointly built by China and the CEEC.
Adhering to the principles of balance, pragmatism, innovation, openness, and inclusiveness, 16+1 cooperation has seen fruitful results and plays an important role in promoting economic and social development in these countries, as well as promoting China-CEEC relations.
Debate on Development of 16+1 Platform Continues
The international situation has changed significantly during the last six years as 16+1 progresses. China under President Xi Jinping has changed its foreign policy course, intensifying its international presence in many parts of the world. The promotion of the Belt and Road Initiative (BRI) as China's major foreign policy tool has been accompanied by the advancement of local regional initiatives, such as the 16+1 platform.
In the next stage, 16+1 cooperation will focus on improving mechanisms, deepening pragmatic cooperation, and enhancing people-to-people exchanges. Quoting the above mentioned diplomat Wang Chao the Sofia meeting aims to deepen open and pragmatic cooperation and jointly promote prosperity and development, and China hopes it will enhance understanding and trust, safeguard multilateralism and facilitation in trade and investment, and discuss the direction and future work for 16+1 cooperation.
The annual China-CEEC think tank conference held prior to the Summit in Sofia on June 29 was an occasion to note the emergence of certain trends highlighted by a number of experts
One of the dominant themes was the anticipation of some kind of breakthrough regarding the broader direction of China-EU relations and a need for the CEEC to find its "own voice" when it comes to bringing forward a desirable model of cooperation. This does not imply accepting Chinese investment and engagement without critical assessment, but it points toward a more fact-based approach to managing the region's relations with Beijing.
"Uncertainty as one of the dominant themes of the current international situation and its impact on China-CEE-Western EU states trilateral relationship was said to be included in the draft version of the 16+1 Sofia Summit Declaration to be published after the main summit on July 7," said Alicja Bachulska, who works as a Chinese politics analyst at the Asia Research Centre, War Studies University in Warsaw on July 3, 2018, as quoted by The Diplomat. According to her, the opinions articulated by many experts during the 16+1 think tank conference in Sofia seem to present a counterpoint to the dominant Western European narrative about growing Chinese influence in the CEE and the region's alleged inability to critically assess this new development.
It was pointed out in the Sofia conference that the increased Eastern European interest in fostering ties with China could be seen as a purely pragmatic attempt to diversify the region's international trade ties. There were speakers who said it is crucial to bear in mind the way in which many CEE states might perceive Brussels and Berlin's anxiety as somehow exaggerated.
Are 16+1 Platform's Activities Becoming Trilateral?
Although the EU does not take a very positive look at this mechanism, China and Brussels will hold their own summit in Beijing in mid July. It is noted that wider EU-China summits have become more tense in recent years.
In the meantime after the Sofia Summit the Chinese Prime Minister Li Keqiang will travel to Germany which is considered by China as an important trade, investment and technology partner in Europe.
Since the establishment of the all-dimensional strategic partnership in 2014, relations of the two countries have maintained the momentum of high-level development, with frequent high-level visits and fruitful results in economy and trade, investment, technology, innovation, and people-to-people exchanges, deputy foreign minister Wang Chao said as quoted by state-run Xinhua news agency on June 29. Li will meet German President Frank-Walter Steinmeier, and will hold talks with German Chancellor Angela Merkel. Li and Merkel will attend the forum on China-Germany economic and technological cooperation and witness the signing of a series of documents, Wang said.
Nevertheless, Berlin has objected many times to the further development of the 16+1 framework. Most recently, German Chancellor Angela Merkel raised the topic during her visit to China in late May 2018. Shortly after the end of her visit, Chinese Minister of Foreign Affairs Wang Yi met with his German counterpart in Berlin, where he suggested that Germany would be welcome to participate trilaterally in the 16+1 platform's activities.
In this frame some questions arise among which how that could change the decision-making processes and the bargaining power of each CEE state involved in the platform. Declarations about China's willingness to combine economic complementary advantages of China and Germany together with the CEE region's developmental have become more frequent but yet their implementation might prove difficult. The same applies to finding a common ground to even start discussing certain problematic issues trilaterally.
In the meantime Ms. Long Jing, the Deputy Director of the Center for European Studies of Shanghai Institutes for International Studies (SIIS), told Albanian Daily News on February 12, 2018 in an exclusive interview that the Western Balkan countries' objectives to join the EU do not conflict with China's relationship with them.
"The EU's main strategic objective in the Western Balkans is to strengthen the regional stability, fasten the transition and lead countries in the region along the path to enter the EU. All of these objectives do not conflict with China's relationship with them, which may also contribute to their economic and social development," the Chinese senior scholar said.
Albania in 16+1
Albanian leaders have expressed their interest and support to the Belt and Road Initiative and 16+1 framework. During a meeting with Chinese Vice Premier Zhang Gaoli who visited Tirana on April 18, 2017 Prime Minister Edi Rama said Albania is looking forward to the cooperation with China and welcomes more Chinese enterprises in the country.
PM Rama, who will attend the Sofia Summit according to reliable sources, was quoted by Xinhua news agency as expressing the Albanian side's hope that the two countries can find cooperation projects that may yield results soon under of the Belt and Road Initiative and 16+1 framework.
As a matter of fact several cooperative projects are taking place or to take place in Albania in the areas of infrastructure, finance and people-to-people exchange. For example, a Chinese company has invested in Tirana International airport to upgrade the infrastructure. The People's Bank of China has signed bilateral currency swap agreements with State Bank of Albania. The visa application procedure has been simplified in a round way. It is also reported that China is eying to set up factories in manufacturing agricultural machinery.
In the frame of the Sofia Summit, Albanian Daily News has asked some political and economic experts and analysts on how much efficient Albania has been to profit from the 16+1 framework as compared with other countries, particularly with regional ones, as well as on their opinions on the real ground of the alleged threat of the spread of Chinese influence to make Albania hesitant towards this cooperative initiative.
An Uneasy Challenge
Prof. Dr. Arben Malaj
Institute for Public Policy and Good Governance
China is investing in new markets for its goods and services. The global competition is ever growing and the trade war is getting tougher and their impact will be felt soon on the global economy. The initiative of the Chinese government to revive the old silk road is in the service of its ambition to be a global, competing and growing economy. Naturally the profit of the countries involved in the One Belt One Road Initiative will be measured by the concrete effects in their economies and the trade balance between them and China.
Albania is officially participant in this initiative with the aim of profiting from the facilitation of making business with 16 countries of this initiative and China.
The project launched by the Chinese government is faced with an uneasy challenge: the financial resources from the member countries or the international financial institutions. The financing schemes offered by China should be based on professional analyses of their effectiveness; they should produce a positive impact on the economic growth and non violation of the stability of the public finances in the participant countries of this initiative.
The attention to the selection of concrete projects and the financing conditions should not be considered as hesitation. Some private Chinese companies are operating in important sectors of the Albanian economy and at the same time the number of Chinese private businesses has increased.
The most profitable projects for the Albanian economy should be those which facilitate its integration in the economic corridors of development at regional, European and global level.
The Distinction between WB, EU
Dr. Zef Preci
Albanian Center for Economic Research
In my opinion, no parallels can be drawn between the economic and trade cooperation of China and EU and of China and specific countries of the Western Balkans. Likewise there is distinction between the cooperation of China with specific countries of the WB. If the relations among the major EU countries like Germany for example and China are based on mutual interests and on a kind of parity, which derives from the largeness of Germany and its role in the economic and political European and world developments, this not the case of the relations of China with the WB countries.
These countries have displayed their own different orientations and preferences in the economic, trade, political and military cooperation with other countries over the last years. Even though the EU integration remains the common line for the political leadership of these countries, it does not happen so for the membership in NATO and the preferences of the political leadership towards Russia and China. So Serbia proclaims itself de facto as neutral with regard to the membership in NATO while the preferences for Russian, Chinese and Turkish investments to some extent are displayed as counteraction towards the constant US and European pressure (mainly of Germany) to restraint the Chinese economic and trade expansion in this region. In fact, the difference is measured by the size of the country, the level and intensity of the mutual relations with the US and the EU integration status. As a result, the relatively big countries (as it is the case of Serbia) or the countries on the eve of the opening of the EU accession talks (as it is the case of Albania and Macedonia) show themselves more receptive or less receptive towards the Chinese investments in the frame of the One Belt One Road project.
Even if Premier Edi Rama takes part in the Sofia Summit, where the Chinese premier will attend, I personally do not believe that it might bring any serious Chinese investment in the Albanian economy. This happens also because of the fact that the Chinese quasi private companies require sovereign government guarantee in the countries with a high public debt like Albania. The Albanian governments have not been serious enough for the finalization of the talks held on specific projects during the last decade. In addition this negative result of the Chinese investments in Albania is linked with the level of the American and EU influence on Tirana government something which cannot be denied. Another factor is that the country is out the development corridors in energy, transport etc. which would make possible its inclusion in projects in the regional context with Chinese financing but having transnational importance.
China Must Agree to Modifications
Bulgarian Political Analyst in Dnevnik
In theory, China is supposed to help develop the infrastructure in a way that makes everyone a winner - the 16 countries and especially the Balkans, the EU (which is sometimes reluctant to disburse money on those projects) and China (which makes inroads in terms of access to the European market).
There are two problems, though. The first is a practical one as investment pledges and project commitments during these summits sometimes prove slow to take off. Secondly, they have an indirect effect on EU-style democratic governance. As the case goes even with EU member Hungary (and potentially with Croatia), for example, such projects may contravene EU procurement rules. They also create in weaker Eastern European countries, and especially in the Balkans, the wrong impression that China is doing a lot for them, while it actually does little, the EU remaining by far the biggest contributor.
As for the impact of 16+1 on EU-China cooperation, the big issue during the summit in Brussels was not the interaction of China with CEE countries per se. It was rather acquisitions of EU businesses, but when it comes to successful enterprises - not to failing ones as is often the case in the region, and especially in Southeast Europe. Also, part of the infrastructure due to be built by Chinese companies here is built from scratch and the EU doesn't mind to have such projects up and running.
The very philosophy of this investment is subject to dispute - and if China does indeed want Europe on its side against the protectionist wave in the United States as suggested, it will have to agree to some modifications of those principles. It's not by coincidence that China's PM Li Keqiang is going to Germany to meet Chancellor Merkel right after the summit - much is still up for discussion.
Not at the Expected Level
It should be said that Albania has participated every year in activities and summits in the frame of this initiative being represented by middle or high ranking delegations. Last year, for example, the former Minister of Transports and Infrastructure, Sokol Dervishaj was in Beijing and it is expected the participation of Prime Minister Edi Rama in Sofia, which is evidence of evaluation of this initiative and its economic projects and other development incentives.
Also, it should be said that there has been exchange of high level visits in the frame of bilateral cooperation during these years, which reflects the good level of the political relations between Tirana and Beijing. A year ago, Albania was visited by the First Deputy Premier of the People's Republic of China and member of the Political Bureau of the Central Committee of the Communist Party of China, Zhang Gaoli.
However, if we speak of the economic relations and particularly of projects and investments which are specifically linked with the 16+1 mechanism as integral part of the One Belt One Road initiative, the matters have not progressed at the expected level, although it should be admitted that a growth has been marked.
Despite that China is ranked as Albania's second largest trade partner with a volume of trade exchanges worth about 600 million dollars, being ranked in the first place for investments value, it is noticed a vacuum with regard to the investments and presence of major Chinese companies in the frame of the 16+1 Cooperation mechanism.
Certainly the acquisition by two Chinese companies of the 'Mother Teresa' Airport and the 'Bankers' company two years ago should be taken into consideration, but, on the other hand, there were withdrawals of the Chinese side with regard to infrastructure projects likely because of the failure to coordinate properly things and find a compromise between the parties.
Beyond this, although in appearance many projects are seen on the table every year, the things are apparently in stagnation and probably the reason, which has influenced on the hesitation of the Albanian side is due to the latest developments in the field of US-China economic relations. The perception is created that for the moment the Albanian side should stay far from the expansion of the cooperation with China because of major political-strategic reasons and a pre- set orientation of Albania towards Euro-Atlantic trend.
But, on the other hand, it should be admitted that the greatest bearers of these values, the US and the EU, have in China, as it is known, their main trade partner absorbing even investments and profiting from a beneficial cooperation. Likewise even if we refer to neighbors or other countries which were like us in Balkans or Europe, we see the same picture and this happens even in countries which are known as the most 'pro- American' like Poland for example.
In this frame, Albania has the favor to exploit even aspects which have been inherited from a traditional friendship between the two countries trying also not to remain hostage of prejudices and look more clearly and steadily forward to get the profits of a long-term cooperation and beyond.