Central and Eastern Europe welcomes China's investment pledge
At the end of November last year, Chinese leaders concluded their two-day summit with Eastern European leaders in Budapest, Hungary, promising an investment fund of US$3 billion. This diplomatic effort was welcomed in Eastern Europe, but Brussels was wary of this. The summit brought together Chinese Premier Li Keqiang and 16 leaders from Central and Eastern European countries. The summit highlighted Beijing’s ambition to expand its influence in the region.
It is estimated that even before the "16+1" summit, Chinese companies, with the support of the National Bank, have pledged approximately US$15 billion in investment in the region since 2012.
Hungarian Prime Minister Viktor Orban, who presided over the summit, said that all European countries are "competing fiercely" for Chinese investment, although not all countries recognize this. Beijing’s “One Belt, One Road” policy aims to strengthen commercial and political relations with 64 countries in Europe and Asia. For poorer European countries, the investment promised by China may help upgrade dilapidated railways, highways and energy plants. But Western diplomats worry that China’s Eastern European investment commitments are mixed with a diplomatic strategy aimed at affecting some EU member states and undermining the fragile consensus reached by the EU on controversial political issues.
One of the more eye-catching deals was that the Bosnia-Herzegovina energy company EPBiH stated during the summit that it had secured a loan of 613 million euros from the Export-Import Bank of China for use in the northeastern town of Tuz near the Serbian border. Tuzla builds a new coal-fired power plant. The project announced in 2014 will be led by a Chinese consortium.
Victor said that for the 16 Central and Eastern European countries, including 11 EU member states, relying solely on European investment is “not enough” to fully tap their potential. “For this reason, we welcome the fact that as part of the new economic world order, China hopes to participate in the progress and development of this region.” Analysts said that a large part of China’s investment commitments in the region has not yet been concluded. The EU’s structure and cohesion fund dwarfs the EU’s structure and cohesion fund; the EU provided 86 billion euros to Poland alone from 2014 to 2020. However, diplomats familiar with the EU's internal deliberations pointed out that in recent months there have been signs that the diplomatic positions of some Eastern European member states have been affected by China.
A European diplomat said that Beijing is supporting efforts to influence the foreign policy of relevant countries through informal meetings such as the 16+1 summit and informal investment agreements (rather than formal treaties).
"China has exerted a lot of pressure on some member states to influence the EU's decision-making. The countries that have benefited from China's investment in infrastructure are preventing the EU from making statements on issues such as human rights or the South China Sea," the diplomat said.
"China hopes to use 16+1 as a template to create more regional sub-mechanisms. This approach is undermining the EU's unified China policy."