By investing aggressively in various parts of the world, China is transferring its foreign exchange reserves to other countries and intends to earn investment return from these activities. However, due to reasons such as economic slowdown and capital outflow, the balance of the foreign exchange reserves is diminishing.
The loss of the “Remain” vote in the referendum puts into question the multibillion dollar Sino-UK cooperation agreements signed during Chinese President Xi Jinping’s state visit to the UK last year, in particular the Hinkley Point nuclear project.
Chinese President Xi Jinping’s state visits to Serbia and Poland in June 2016 follow his state visit to the Czech Republic just 3 months earlier, underscoring the importance China places on the markets of Central and Eastern Europe.
It is ironic that the world’s largest trading nation still needs other countries to judge its trade status, an indication that China has a long way to go to transform its economic prowess into political power. Can China exercise its economic weight to win more political support?
The saturated domestic market compels China to export its capabilities to fuel its economic growth. China’s Asian neighbors are facing shortages of capital and technology. By satisfying these needs, China can help its companies to expand overseas and climb up the global industry value chain.
China, the US and their respective supporters are engaged in a propaganda “war” regarding the South China Sea. China has launched a worldwide information campaign that justifies its position. Officials and analysts in the US have seemingly been dragged into the media “gutter” and become involved in a public information campaign of their own.
As President Xi Jinping has recently visited the Czech Republic and his visits to Serbia and Poland are expected in the upcoming weeks, it is the right time to assess the state of the relationship between China and Central and Eastern Europe and the developments within the 16+1 framework.
In his address to the 2016 Shangri-La Dialogue, US Secretary of Defense Ashton Carter outlined the US concept of a principled security network in the Asia-Pacific. The US sees China’s activities, especially in the South China Sea, as leading it towards raising a “Great Wall of self-isolation.”