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China's 'New Silk Road'

Anastas Vangeli
November 5, 2016

From roads in Montenegro to industrial parks in Poland, China has become one of the biggest investors in eastern and southeastern Europe. The Beijing-led "16+1" initiative promises to boost cooperation with the region.

Tschechien Staatsbesuch Xi Jinping und Milos Zeman
Xi Jinping visited the Czech Republic earlier this yearImage: picture-alliance/AP Photo/M. Krumphanzl

In the past 25 years, there have been a number of international platforms focusing on Central, East and Southeast Europe (CESEE). However, few have been as comprehensive and ambitious as the Beijing-led initiative dubbed "16+1," which brings together 16 post-socialist countries, eleven of which are European Union member states and five of which are in different stages of accession. China is aiming to promote "pragmatic cooperation" across a number of policy areas, with the goal of making the most out of CESEE's untapped economic potential.

On November 5, leaders from China and CESEE countries will hold their fifth-annual summit in Riga. The high-level talks are accompanied by business forums, think-tank conferences and other sideline events. Beyond the summit, there have been a vast array of gatherings under the 16+1 framework that involved various branches of government, academia and business. Delegations of CESEE representatives are now regularly flown to China and vice versa.

Infografik Karte 12.000 Kilometer auf der Schiene ENG UK-China Frachtzug

New era of cooperation

The increased interaction has been an unlikely development. Only few years ago, contact between the two sides was limited and far from enthusiastic. In the 1990s and early 2000s, many CESEE governments pursued ideological anti-communist diplomacy, which was not fond of closer ties with China. Since then, as elsewhere in the EU, political issues have been pushed to the side, allowing economic diplomacy to flourish. Today, Sino-CESEE relations are said to be at their highest point since the founding of the People's Republic of China in 1949, when CESEE countries were among the first to recognize it - a fact that Beijing considers to be of special symbolic significance.

Buying spree: China invests in Europe

Chinese policymakers and experts say that in 2016, China-CESEE relations are ready to move beyond the initial phase of rapprochement. Earlier this year Chinese President Xi Jinping visited the Czech Republic, Serbia and Poland - signifying the increased importance Beijing is placing on the region.

16+1 has also become a crucial part of China's "Belt and Road Initiative" (BRI), also known as the "New Silk Road." Rooted in both its domestic imperatives (developing western Chinese regions and exporting overcapacity) as well as the thirst for capital across Asia, Africa and Europe, the BRI pushes for coordinated development and policy, promotes investment in infrastructure and financial integration and calls for "civilizational dialogue."

In practice, the 16+1 cooperation has, in only a few years, led to a significant increase in the economic importance of CESEE for China and vice versa. In 2015, for example, China had almost as much total trade volume with the bloc of 16 as it had with Russia. Investments from both Chinese and state-owned enterprises have gradually increased. A number of transport infrastructure projects - including the Budapest-Belgrade high-speed rail line, a leg of the "China-Europe Land-Sea Express" from Hungary to Greece - are underway.

Living up to its potential

However, aside from these achievements, the overall impression is that 16+1 has yet to live up to its full potential. Much more is being promised and projected than actually delivered. The economic cooperation between China and CESEE nations is still dwarfed by China's partnership with the rest of the EU.

Sino-CESEE relations have had to adjust to the "new normal" of the Chinese economy, which now grows at a rate of around 6.5 percent. CESEE countries, which often lack resources and experience, have struggled to keep up with the pace that China has set under the comprehensive 16+1 format. Domestic, regional and European-wide political circumstances are also limiting. Thus, for China too, the early stages of cooperation have been a learning experience. Unlike their CESEE counterparts, however, Chinese policymakers pace themselves for the long run - often milestones are set for the decades to come.

The summit in Riga will provide an opportunity for Chinese and CESEE leaders to take stock of current developments and announce future measures and areas of cooperation. In a time when the EU faces multiple crises, from the rise of destructive political forces to increasing tensions between Russia and NATO, the 16+1 summit provides a rare opportunity to map out visions for global economic renewal. It is also understandable that sometimes the progress is slower than expected.

Anastas Vangeli is a doctoral researcher at the Polish Academy of Sciences, Warsaw, and a Claussen-Simon PhD Fellow of the ZEIT-Stiftung Ebelin und Gerd Bucerius.