Soft power of money: how China is buying Europe
Material posted: Publication date: 16-04-2018
"Our goal is to see a prosperous Europe" — this statement was made Prime Minister of China Li Keqiang, during the sixth summit of the group of "16+1", which was held in Budapest in late November last year.

The idea of establishing an economic cooperation program between China and the countries of Central and Eastern Europe (CEE) was born in 2011 and called "16+1". In 2012 Warsaw hosted the first summit on Chinese initiative, which, besides China, was attended by 11 members of the European Union — Bulgaria, Croatia, Slovenia, Czech Republic, Slovakia, Latvia, Estonia, Lithuania, Hungary, Poland, Romania -- as well as five non-EU States: Albania, Bosnia and Herzegovina, Macedonia, Montenegro and Serbia.

The format of "16+1" can be considered a composite part promoted by the Beijing initiative of "One belt one road". China to invest in the development of infrastructure and high-tech projects abroad, strengthens the value of the Renminbi as an international currency, and humanitarian exchanges applies the tools of soft power. One of the latest projects of China in the framework of the initiative "16+1" — the creation of Interbank Association of China and countries of Central and Eastern Europe for the financing of the largest strategic projects in the region.

In the first stage of this programme, the China development Bank promised to provide countries of Eastern and Central Europe of €2 billion.

The aid from China comes to these countries by way of: 2018 ends the subsidized program of the European Union, thanks to which the countries of Eastern Europe received a lot of money. In Poland more than half of all investment from 2014 to 2017 was actually the grant of the European Union, while in Romania, this assistance amounted to about 60% of the total investment. The funds received from the EU, much higher than the volume of revenues from the Eastern block.

Largely thanks to European subsidies in 2017 fastest growing European country was Romania, where GDP grew by 6.4% for the year. Poland, Czech Republic and Hungary also showed more intensive growth than the countries of Western Europe, and also showed the lowest rates of unemployment.

Now the leaders of the countries of Central and Eastern Europe rightly believe that in the not too distant future the situation will change quite radically — in the words of the Hungarian Prime Minister Viktor Orbanand, by 2030, "the EU will Finance mainly Germany and the Visegrad countries".

In early January, Orban said that he expects the receipt of subsidies from the EU to the region's economy. And threatened that if the East European countries will receive these funds, they'll find another source.

"If the EU will not be able to provide funding to us, we refer to China," said Hungarian Prime Minister.

Chief researcher of Institute of Far East of RAS Alexander LOMANOV noted that the States of Eastern and Central Europe will now be interested in alternative economic cooperation. "These countries are interested in that came to them capital that they came to some technology," — said the expert.

The development of the relations of the CEE countries with China coincides with increased tension between these countries and the EU as a whole. Prime example: the conflict of Brussels with Warsaw and Budapest because of the governments of both countries reform of the judicial system in the European Union believe the attempt of the authorities to subordinate the judiciary to the Executive. Another reason for discontent — legislative initiatives of many Eastern countries concerning the admission of refugees. In the European Union are increasingly saying that such a policy is nothing but a violation of human rights.

Countries such as Hungary and Poland can use its new friendship with Beijing to strengthen the position in disputes with the European Union. China from this friendship already receiving nice dividends in the international arena.

For example, in 2016, when between China and the Philippines sparked a dispute about the ownership of the waters of the South China sea. China claimed (and claims still is) 80% of these waters, however, the international court of the UN in the Hague sided with the Philippines. The EU, which makes all the decisions and resolutions only with the consent of all its members, issued a resolution on this issue, thanks to the efforts of the CEE countries, China was not mentioned at all.

Similarly, Beijing will be able to use their novouredeni influence in Europe and to promote their other interests around the world. Last year the Financial Times newspaper with reference to sources in diplomatic circles reported: Hungary and Greece told EU partners that they will not support decisions which will contain critical statements about human rights in China.

Alexander LOMANOV noted that the ongoing concern of a number of leading European countries such as Germany and France.

"The old economically developed Europe suspects that China uses this format to split, Europe to impose some new rules of the game", — said the expert.

Thus, according to Romanova, Beijing does not seek to support the testimony of the individual Eastern European States, because such sentiments do not contribute to the interests of China in the framework of the "16+1". CEE is interested in China as an economic partner because many of the countries in the region are members of the EU, which, in turn, represents the total market with a single currency and rules.

"They are valuable for China, the fact that they have European rules, laws and access of manufactured goods to the European market, but Eastern salaries, real estate prices. These are entrance gates to China, through which it can enter the European market, to create any production, which will, consequently, competitive salary rates, for example," explains the expert.

Alex Griazev, Olga Cherenkova


Tags: Europe , China